Citi: "If Trump Wins US Presidential Election, Dollar Value Will Rise 5%"

Will Follow a Pattern Similar to 2020
Republican Victory Has Major Impact on Bond Market
Wall Street's Top Concern Is Tax Policy

Global investment bank Citigroup analysts forecasted on the 15th (local time) that if former U.S. President Donald Trump wins the November presidential election by a large margin, the value of the dollar will surge and the bond market will plummet.

This estimate is partly based on the fact that after Trump's surprise victory in the 2016 presidential election, the dollar rose about 5%, but just before the 2020 election, when Trump was defeated by President Joe Biden, the dollar fell by 5%.

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Citigroup analysts stated, "If former President Trump wins the election and the Republican Party secures a majority in both the House and Senate, the so-called 'Red Wave,' the dollar value is expected to rise about 5%." Currently, Trump is considered the leading Republican presidential candidate. In November, the U.S. will hold elections for the presidency along with 34 of the 100 seats in the Senate and all 435 seats in the House of Representatives.

They also expect the market to move in a pattern similar to 2020. Typically, election results have been reflected in the market on the night of the voting day. Citigroup analysts said, "Potentially, the peak value of the dollar this year is expected to appear just before the election."

In particular, if the Republican Party wins the U.S. presidential election in November, it is expected to have a significant impact on the bond market as they may push for new tax cuts, economic stimulus measures, and additional tariffs on competitors such as China. Citigroup analysts explained, "This could lead to interest rate hikes, a steeper yield curve, and higher term premiums," adding, "It is highly likely to resemble the sharp decline in the bond market seen in October last year." At that time, the market saw massive bond sell-offs due to concerns over the rapid increase in U.S. debt.

Wall Street's focus on this U.S. election is expected to be on tax policy. Citigroup estimates that Trump will prioritize extending the current income tax system and additional corporate tax cuts. However, continuing tax cuts could add more than $3 trillion (approximately 3,992 trillion won) to the U.S. government's fiscal deficit over the next decade. Citigroup said, "Considering he is a one-term president, it is questionable whether the Republican Party will comfortably accept adding trillions of dollars to the deficit," and added, "President Biden may extend tax cuts but could also raise corporate taxes."

This content was produced with the assistance of AI translation services.