Biden's win could boost Asian currencies
The presidential election in the United States is approaching. In the next few weeks, the current president Donald Trump will fight for the post of the most powerful man on the planet with his democratic counterpart Joe Biden. Both presidents have a different vision and approach towards the future of the United States and their policies might affect not only US markets but also those of Asia and Europe. And it’s some of the Asian countries that currently have unhealthy relations with the US due to Trump, and should Biden come to power, he will try to change that.
Return to international agreements
In the past, Biden reiterated his sympathy towards the countries in the Asian region and towards international agreements that were repealed by Trump. Immediately after taking office, Trump withdrew US membership in the Trans-Pacific Partnership (TPP), a multilateral regional free trade and cooperation agreement between member states. So far, it includes Japan, Brunei, Malaysia, Vietnam, Singapore, Australia, New Zealand, Canada, Mexico, Chile and Peru. The election of Biden could be supported by the covid-19 vaccine, which would support economic recovery worldwide and also in high-risk areas.
Under Biden's leadership, US foreign policy will be much more predictable. According to UBS, most Asian currencies could strengthen by 3-4% against the dollar. A Thai baht, currency that is currently under pressure due to the limited travel, could strengthen significantly. That is why Biden’s win would be an ideal combination with the advent of the vaccine. Because Trump's win would not help Asian currencies that much, but the vaccine alone would support currencies by 1-2%. The Chinese yuan is a whole different story, as it cannot be expected that Biden would want to continue the trade war in China and a new team of negotiators would take place at the negotiating table under the Biden administration.
Chart: Weekly USDSGD (Source: cTrader PurpleTrading)