The impact of Trump's election on the Forex market was significant. During his presidency, the dollar performed poorly, losing 7.66% of its value in 2020, making it the worst-performing currency that year ¹. However, it's essential to consider the broader context, as the dollar's performance can be influenced by various factors, including interest rates, inflation, and global economic trends. Key Factors Influencing the Dollar's Value - Interest Rates: Changes in interest rates can impact the dollar's strength. During Trump's presidency, the Federal Reserve raised rates to combat inflation, which initially strengthened the dollar ². - Inflation: Rising inflation can weaken the dollar. Trump's policies, such as tariffs and tax cuts, contributed to inflationary pressures ². - Global Trade and Geopolitical Tensions: Trade disputes, particularly with China, and geopolitical tensions can create uncertainty, negatively impacting the dollar's value ². Potential Election Outcomes and FX Market Implications The 2024 election could lead to two main policy directions: continuity and international cooperation or deregulation and protectionism. If Trump were to win, his policies might increase FX market volatility, especially with regards to trade and tariffs ². On the other hand, a win by his opponent could lead to a more stable trade environment and reduced currency volatility. Mitigating Risks for Businesses To navigate potential FX market fluctuations, businesses can: - Monitor the Dollar's Trajectory: Keep a close eye on economic indicators, such as interest rates and inflation ². - Hedging Strategies: Implement or refine FX hedging strategies using financial instruments like forward contracts, options, and swaps ². - Diversify Supply Chains and Markets: Explore alternative markets and suppliers to reduce reliance on any single country or region ².