Geopolitical Risk and Trump’s Victory: What Was the Effect on Currency Values Against the USD?
Why did the most politically stable countries experience the largest currency depreciations against the USD after the 2024 US election?
This is fascinating. A just released study under the NBER Working Paper Series considered how a country’s institutions interacted with FX regimes after the vote.
Broadly – and using our ICRG data – the authors found that the correlation between the depreciation rate and a country’s ICRG score was ‘clearly positive around 40 percent, and significant at the 1 percent level.’
Some 73 currencies were studied, and the modelling plotted exchange rate movements of the USD a week after the vote against ICRG’s scoring.
What they found was that the countries with the better ICRG scoring experienced the largest depreciation!
There’s lots here to explain the movements at different time periods and in relation to future US policy. Have a look when you have a chance:
Our data drives.
The PRS Group
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