Trump’s victory may affect Nigeria’s inflation – Analyst

It has been projected that the emergence of Donald Trump as the 47th President of the United States of America may worsen inflationary pressure in Nigeria and cause a dip in the global oil prices which will affect Nigeria’s oil revenue.

This was disclosed Thursday in an investor note from a trading platform, FXTM.

The note, titled ‘US Elections: Trump wins! What does this mean for Nigeria?’ was authored by a Senior Market Analyst, Lukman Otunuga.

In the note, Otunuga affirmed that given Trump’s policy direction, Nigeria’s economic climate may be impacted negatively.
He said, “Trump’s victory may pressure oil prices as he is seen pushing for a further increase in domestic oil and gas production, leading to increased supply in the long term. In addition, his policies could see a boost in US growth – triggering inflationary pressures.

“Should this prompt the Fed to keep interest rates higher for longer, a stronger dollar may drag oil prices lower as a result. This could be bad news for major oil-producing countries that acquire most of their revenues from oil sales. For Nigeria, the combination of lower global oil prices and a stronger dollar could add to its woes as it navigates a rough period.”

The PUNCH reports that the dollar surged and Bitcoin hit a record high on Wednesday as traders bet on a victory for Donald Trump, with the ex-president securing key swing states necessary to take the White House. This boosted expectations for fresh tax cuts, tariffs, and rising inflation.
Reports said the dollar jumped by 1.5 per cent to 154.33 yen, its highest since July. It also rose by more than one per cent against the euro and by more than three per cent against the Mexican peso.
Bitcoin surged nearly $6,000, hitting a record $75,330.88, surpassing its previous peak of $73,797.98 in March.

On the S&P500 index, futures climbed 1.4 per cent signalling that the S&P500 will open hitting fresh all-time highs. As mentioned in its weekly market report, FTXM said that the prospects of corporate tax cuts and a softer regulatory environment under Trump are good news for US equity bulls.

Otunnuga opined that Trump’s return to the White House will most likely set the market tone for the next few years with the USD, Bitcoin and other assets tied to the “Trump trade” the biggest winners.

“Investors with some skin in the game have already experienced how markets reacted under Trump between 2017 – 2021.  Trump’s unpredictability, policy uncertainty and tariff wars with China left investors on edge. This and other major themes triggered sharp moves on the Vix index during his term. Market volatility jumped over 60 per cent during Trump’s previous administration, from 2017 until 2020. Since then, volatility fell about 10 per cent under President Joe Biden,” he asserted.

The analyst added that Trump’s return to the White House is likely to trigger fresh levels of volatility across the globe.

“Trump’s proposed tariff increases in Europe and China could spark a global trade war. If this pushes up the prices for American consumers, a return of inflation may spell higher interest rates – boosting the USD.
“An appreciating USD could hit gold prices along with emerging market currencies. On the geopolitical front, Trump has already vowed to ‘stop wars’ and swiftly end the war in Ukraine.

Any major shifts in US foreign policy that escalate tensions could trigger risk-aversion,” it was said.