The emergence of Donald Trump as the 47th President of the United States could exacerbate inflationary pressures in Nigeria and lead to a decline in global oil prices, which would negatively affect Nigeria’s oil revenue. This outlook was shared Thursday in an investor note from FXTM, a leading trading platform.
Authored by Senior Market Analyst Lukman Otunuga, the note, titled “US Elections: Trump Wins! What Does This Mean for Nigeria?” highlights the potential economic repercussions of Trump’s policy direction on Nigeria. Otunuga suggests that Trump’s victory may pressure global oil prices due to his push for greater domestic oil and gas production, which would increase supply over the long term. Additionally, his policies could drive higher US growth, leading to increased inflationary pressures.
“Should these pressures prompt the Federal Reserve to keep interest rates higher for longer, the resulting stronger dollar could push oil prices lower,” Otunuga stated. “This scenario would be problematic for oil-dependent economies like Nigeria, as lower oil prices combined with a stronger dollar could worsen the country’s economic challenges.”
The note also referenced recent market movements following Trump’s projected victory. The US dollar surged by 1.5% to 154.33 yen, its highest level since July, and Bitcoin hit a record high, surpassing $75,000. These increases reflect investor optimism about Trump’s tax cuts, tariff policies, and the potential for rising inflation.
Otunuga further explained that Trump’s return to the White House could shape market dynamics for years to come, particularly benefiting assets tied to the “Trump trade,” including the US dollar and Bitcoin. “Investors have already witnessed the impact of Trump’s policies between 2017 and 2021. His unpredictability, trade wars, and policy uncertainty led to market volatility, which spiked over 60% during his first term,” he noted.
Looking ahead, Otunuga predicts that Trump’s presidency may reignite volatility, especially if his proposed tariff increases on Europe and China provoke a global trade war. “Higher tariffs could lead to rising prices for American consumers, triggering inflation and higher interest rates, which would further strengthen the USD,” he added.
A stronger dollar could put pressure on gold prices and emerging market currencies. Additionally, any major shifts in US foreign policy, particularly in regard to the war in Ukraine, could spark geopolitical tensions and increase global risk aversion.
In conclusion, Otunuga emphasizes that Trump’s policies and their impact on global markets are likely to drive significant volatility in the years to come, presenting both opportunities and challenges for emerging economies like Nigeria.
