The US Presidential Election

Now that the US presidential election is over how would you estimate the impact it, and its resolution, on FX rates for the next year and the subsequent impact on MNC’s cash flows?Student 1:Forex exchange rates are vital for international trade between individuals, organizations, and governments that do not have a common currency. In today’s free-market economy, forex exchange rates determine a country’s level of trade in international markets. However, FX rates are often affected by political events such as presidential elections, or national referendums. A country’s political state influences its economic performance that, in turn, affects currency strength. Investors prefer directing their financial resources to countries that have little or no risk for political turmoil and instability. As such, the US is an attractive market for foreign investors because the country’s presidential elections are well-organized and peaceful. Research indicates that Republican presidencies trigger a rise in the Dollar’s value within the first year after an election. On the other hand, Democratic presidents often start with a low Dollar value which then increases towards the end of presidential terms, (Ashour et al., 2019).An increase in the dollar value attracts foreign investors; thus, cash inflows can increase for Multinational Companies in the US. However, Yale Hirsch’s “Presidential Election Cycle Theory” suggests that weak performance in Equities is recorded in the first year after presidential elections. Different presidents often adopt different policies within the first year of being in office. During this time, investors are uncertain about the trade policies that will be implemented (Colón-De-Armas et al., 2017). FX rates fluctuate in the first year after a presidential election creating more uncertainties for foreign investors. Therefore, multinational companies are likely to register a decrease in their cash flows.Student 2:When it came to the 2016 U.S. presidential election, most polls predicted that Hillary Clinton would win the election. Her views and proposed policies on international trade and U.S. relations with Mexico were substantially different than the views of President Donald Trump. This is why the peso declined rapidly in value after the election, reflecting increased uncertainty about the future of trade between the U.S. and Mexico.However, overall, the response from the currency markets has largely been less severe than analysts had initially predicted. This is because Trump gave a surprisingly considered and humble victory speech, imploring the American people to unite and work together.The US Dollar did collapse against currencies that were considered comparatively safe. This included the Pound (GBP), Euro (EUR), Swiss Franc (CHF) and Japanese Yen (JPY).MNCs also did not take well to Trump’s hardline approach on trade with China because of all the factories in that region. It changed the nature of their investments, and more went to their domestic interests.Student 3:Compared to the known outcome of the US presidential election in the question, an important factor that has to be taken into consideration at the moment is the possibility of election surprises. Election surprises occur when the election result does not match forecasts or previous poll results, and can have a significant impact on exchange rates. For example, within a few days after Trump’s somewhat surprising victory in 2016, which has diverged from results of most opinion polls, the value of the Mexican peso against USD declined dramatically. The depreciation reflected the growing uncertainty and increasing market anxiety over U.S-Mexican trade relations. The Chinese Yuan will likely experience a similar loss if President Trump were elected for a second term.Even without the element of election surprises, the outcome of the presidential election will affect exchange rates in a slightly longer run depending on the respective monetary, fiscal or even foreign policies of the Republican/Democratic candidate. Given the unpredictable outcome, changing policies under the new administration and the resulting fluctuation in the U.S dollar market, it will not be surprising to see a decrease in MNC’s cash flows which are highly susceptible to exchange rate risk.

Assignments Ace
Order NOW For A 20% Discount! Coupon code: WELCOME20
Pages (550 words)
Approximate price: -

Why Assignmentsace?

Top Quality and Well-Researched Papers

We offer top-quality and well-researched assignment papers at low prices. We believe in offering the best quality services as we care about your grades, academic performance, and success. Our writers range from masters and Ph.D. graduates to professors. Our panel of expert academic writers does not rest until they are 100% sure your essay will score you an A+ only.

Professional and Experienced Academic Writers

Our writing company has the best panel of experienced academic and business writers. Our writers have experience of up to 9 years in the writing industry. They will go the extra mile to make sure you are handing in a quality A+ paper. If you are a student searching for any academic help, I advise you to seek for our experts' help.

Free Unlimited Revisions

Our clients frequently ask if they will be liable to free revisions once they place an assignment order with us. However, how many times you ask for revisions, our academic experts will help you. Either way, there is no need to worry as we provide free revisions. We are always after our clients’ satisfaction, and we are very proud to say that all our clients are satisfied with our writing services.

Prompt Delivery and 100% Money-Back-Guarantee

We are strict when it comes to assignments deadlines. We make sure our writers keep in mind the assignment delivery time. Because we care about clients, we go that extra mile to make sure you do not face those consequences. Whatever the deadline, we promise our clients a prompt delivery.

Affordable Prices

Are our charges too cheap for you to believe? Here at Assignments Ace, we offer quality assignment help at affordable prices. Our prices are substantive to cater to all students. Every time you place your assignment order with us, you are guaranteed a 15% discount.In addition, new clients enjoy a discount of 30% when placing their first order with us.

Customer Support 24/7

Do you have any queries for us? Or do you want to consult with our expert academic writers? Go ahead and contact us. We have 24/7 online friendly customer service. Whatever time of the day or night, we are always available for you. You can chat with us via our online chat services or contact us via our email, [email protected]

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Our assignments help website is the most internationally sought-after site because we offer a wide range of top-quality services at low prices. Our proud history as an assignment help company stretches back nine years. We do offer Top Quality, Well-Researched Papers and Online classes to help students internationally. We do both of these things at cheap affordable prices by offering up to a 30% discount.


Essay Writing Services

Writing an essay is one of the most tedious tasks that require a lot of concentration and research. Writing an essay takes hours and even up days. We offer the best custom writing service and have your best interests in mind. Most online writing industries do not have qualified writers and are just after your money. Worry less, our writers who have enough experience are ready to give you the help you need. Our writers are carefully selected and undergo some tests to prove their professionalism.


Admission Papers

Are you applying for a college? We help students join their dream college by writing for them strong admission papers that showcases their qualities and personalities. An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. We utilize statements of purpose, personal statements, and personal essays to make a compelling case by stating your leadership activities, education, accomplishments, and professional background.


Editing and Proofreading

We offer an abundance of online proofreading and editing services for our clients. By definition, proofreading is the final surface-level check done on a document. Other academic writing companies offer editing and proofreading as separate services. At our assignment help website, we offer editing and proofreading services as one complete package at affordable cheap prices. Grab your 30% Coupon if you order today!!!


Business Paper

Are you a student pursuing an MBA in business, no need to look any further? We offer the best assignment help as we have the top niche MBA business writers who will give you A+ assignments. Over the years, our experts have helped students accomplish their academic dreams. We have helped thousands of students complete their business assignments with confidence.Grab your 30% Coupon if you order today!!!