The year 2024 is a pivotal one in the political history of the United States as its citizens decide who will pilot the country for the next four years. This time, the race is between Former President Donald Trump who lost his re-election bid four years ago and Kamala Harris, the current Vice President.
Trump heads into the race more like a cat with nine lives after surmounting a number of legal hurdles in front of him. He could become the first US President to return to the White House after losing his re-election bid since Grover Cleveland did same back in the 19th Century. For Kamala, she enters the stage seeking to make history by becoming the first female president of the world’s most advanced democracy.
With the race heating up in several swing states, victory for either candidates will definitely have its positive or negative impact on international political dynamics, trade and other vital issues.
As a World power, the US domestic or foreign policies will certainly resonate across the world even here in Nigeria. This is why we have x-rayed what a Trump or Harris victory could mean for the Naira;
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Middle East Tensions
Either of the candidates’ approach to international conflict especially in the Middle East could have a direct impact on oil production output and its price. This will have a ripple effect on Nigeria’s domestic prices which is now subject to the dictates of market forces.
How Trump or Harris responds to the tension between Israel and Iran for example could also impact oil price stability which will have an impact on the price of the product here and ultimately the value of the Naira.
Also, stability or instability in global politics could affect or improve investors confidence in an emerging market like Nigeria.
Approach to International trade
The US president’s approach to trade disputes, tariffs and support for global institutions like the World Bank and IMF could also impact the Naira’s value.
A Trump presidency could mean higher trade tariffs to ensure a stronger dollar and compete against China just like he did in his first term. The introduction of these tariffs and a stronger dollar means more depreciation for the Naira.
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However, Harris’ anticipated support for the World Bank, AFDB, IMF and others could mean well for Nigeria given that these organisations are big financial donors to the country.
Ultimately, a US economic policy favouring global engagement and multilateral trade could be beneficial to the stability of the Naira.
Interest rate and fiscal policies
The US President’s economic policy will determine the Federal Reserve’s approach to interest rates and other monetary policies.
A higher interest rate will attract more foreign capital for the US which will strengthen the dollar against other currencies including the Naira.
Foreign capital inflow
The winner of this US election will have a direct impact on the dynamics of foreign capital inflow into Nigeria. Kamala’s anticipated business-friendly economic environment might enhance capital flows to emerging markets like Nigeria.
With more capital inflow, Nigeria can begin to anticipate a boosted external reserve and in turn a stronger Naira.
Meanwhile, a protectionist approach like the one pursued by Trump in his first term could lead to a stronger dollar and weaken the Naira.
In addition, the reaction of the global market to whoever wins the election could also have a huge impact on investor confidence in a growing economy like Nigeria.
The US election is one closely watched by the entire globe as the policies of whoever wins will have a huge impact on international conflict, economic and trade dynamics. However, the domestic policies of the Nigerian government will have a more far reaching effect than an external one.
To this end, it is safe to say that whatever impact the US election might have on the Naira is suggestive and subject to other domestic variables.
