Dollar Begins To Depreciate As Biden Advanced Toward White House
In the United States, Biden is close to winning the presidential election, and the US dollar is at a two-year low against other Asian currencies, including the Yuan.
Financial markets are in turmoil as incumbent Republican President Donald Trump hints at legal action in several states, accusing them of rigging and vote-theft.
Experts and traders say the situation could temporarily weaken the dollar and affect its performance.
On the other hand, the Pound and Euro have depreciated against the Dollar as media reports suggest that the Bank of England has begun to consider negative interest rates.
The policy is likely to be maintained by the Federal Reserve as traders and economists closely monitor the situation and the value of the Mexican yuan against the dollar has risen sharply in this nerve-wracking presidential election.
Biden claimed victory in Wisconsin and Michigan, while the former vice president reportedly has the upper hand in Nevada and Arizona, but Trump has the upper hand in Georgia and Pennsylvania.
The Biden administration is expected to pursue soft trade policies that will reduce the value of the dollar against other world currencies, which under the Trump administration faced tariff risks.
The chief currency strategist at Tokyo’s Mizuho Securities, said the rise in the value of the yuan and peso against the dollar suggests that the market is reacting to Biden’s victory, for a number of other reasons, against the dollar. You can also see the value of the Euro rises.
The yuan hit a two-year high of $6.6381, with Biden’s victory likely to boost China’s currency in the trade market.
Emerging market currencies such as the Malaysian ringgit and the Indonesian rupiah have also appreciated against the dollar.
The euro traded at 17 1.1736 on Thursday but fell 0.25 cents to 29 1.2960.
If Biden succeeds in overcoming the legal challenge posed by his rival Trump to become president, Republicans will likely seize control of the Senate and use it to thwart Biden’s agenda. This is another complex aspect for currency traders.
Some analysts say Republican control of the Senate will prevent the Biden administration from raising corporate taxes, which is a positive thing for equities.
However, he said that a divided government could have major financial implications and could be viewed negatively.
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