Election year 2024: these coins you should pay attention to

Although the tension over the House of Representatives elections has reached boiling point, the outcome has little effect on the currency world. That's where 2024 will really be an interesting election year.

At the beginning of this week, the peso barely reacted to Javier Milei's somewhat surprising victory in the Argentine presidential elections. Just as the euro will hardly or not move at all after the House of Representatives elections next Wednesday. Next year there will certainly be a number of elections that could have a major impact on the currency world.

February 14: Indonesia
The first election of 2024 will take place on January 7 in Bangladesh. But the first election that may have a real impact on the financial world is more than a month later. Because on Valentine's Day, more than 200 million Indonesians can cast their votes. For now, the chance of a violent movement of the rupiah seems quite small. Prabowo Subianto is the clear favorite to succeed Joko Widodo as president. His program suggests there will be no major policy changes in one of Southeast Asia's major economies. The rupiah has been slowly but surely losing ground on Western currencies over the past ten years and Widodo's successor will find it difficult to reverse that trend.

June 2: Mexico
The Mexican peso is one of the big currency winners in 2023. The currency has risen by more than 12% against the US dollar since the turn of the year. This rise is largely due to the Mexican economy, which is taking full advantage of the trend that American companies are looking for alternatives to Chinese suppliers. As a protege of President Andrés Manuel López Obrador, Claudia Sheinbaum is a favorite for the Mexican elections. On balance, its policy plans are favorable for the peso. But the major risk for the Mexican currency lies mainly in the election that will take place above the northern border a few months later.

November 5: United States
For the financial markets, the presidential elections in the United States are potentially one of the key moments of 2024. Eight years ago, the dollar soared when the fumes cleared and Donald Trump emerged victorious. In 2020, the American currency took a hit when it became clear that Joe Biden took over from Trump. In recent years, the exchange rate of the dollar has been strongly determined by the US central bank, which has sharply raised interest rates in response to rising inflation. For now, however, the Federal Reserve is taking pause. As a result, the dollar may become more of a plaything in the American election battle in the course of 2024.

??: United Kingdom
The big question is not so much who will win the British elections, but rather when they will be held. Prime Minister Rishi Sunak will have to hold a new ballot - probably with some reluctance - in the course of next year. According to the infamous betting shops in the United Kingdom, Sunak's Conservative Party has only a little more than a 10% chance of coming out on top. Such an election defeat does not necessarily have to be that bad for the British pound. Labor leader Keir Starmer has already hinted that he is open to strengthening ties with the European continent. The boost from a booming trade could be just the medicine the British economy and the pound need to bounce back from a difficult few years.

Joost Derks

Joost Derks is a currency specialist at iBanFirst. He has over twenty years of experience in the currency world. This column reflects his personal opinion and is not intended as professional (investment) advice.

© DCA Market Intelligence. This market information is subject to copyright. It is not permitted to reproduce, distribute, disseminate or make the content available to third parties for compensation, in any form, without the express written permission of DCA Market Intelligence.