FX MACROECONOMICS
Taking a closer look at the numbers and counting the full terms of the ruling parties sheds some more light on what could be an inherent ‘bias’ towards the currency dependent on which party has been elected. I list the administration by party and changes in the value of the dollar below:
U.S. dollar: percentage changes by political party (1969 to 2017)
REPUBLICAN: Nixon and Ford (January 1969 to January 1977)
Percentage change in U.S. dollar: -14.37%
DEMOCRAT: Carter (January 1977 to January 1981)
Percentage change in U.S. dollar: -10.28%
REPUBLICAN: Reagan and Bush (January 1981 to January 1993)
Percentage change in U.S. dollar: +0.26%
DEMOCRAT: Clinton 1993 to January 2001)
Percentage change in U.S. dollar: +30.80%
REPUBLICAN: G.W. Bush (January 2001 to January 2009)
Percentage change in U.S. dollar: -29.13%
DEMOCRAT: Obama (January 2009 to January 2017)
Percentage change in U.S. dollar: +24.72%
The 1970s were not a good time to be holding U.S. dollars under administrations of any stripe.
34 FX TRADER MAGAZINE July - September 2017 (January The decline which followed
Nixon’s departure from the stability of the Bretton Woods Agreement saw a net loss for the combined Republican term at 14.37% which was extended under Carter before Reagan and monetarism saved the day, halting the inflationary spiral which had dogged monetary policy during the 1970s. Apart from the fact that Nixon abandoned the stability
of a
‘pegged‘ exchange rate in favour of a floating (or sinking ) currency, no major
political biases were apparent until
the 1980s.
Things started to become clearer during Reagan’s second term and into Bush senior’s sole term as the dollar saw a complete reversal in its pre-
latter half of
party the
Plaza Accord advance by the time the Republican triple-term had ended in 1993. Some might say that the next president, Mr. Clinton, may have benefitted from a ‘peace dividend’ as an extended period of
global
stability unfolded following the end of the Cold War, which may have contributed to the first sustained period of strength under a Democratic President. The U.S. unit ended his scandal-hit second term some 30% higher than where he found it eight years prior.
The Clinton Presidency gave
way to a less sanguine era in which George W. Bush gifted the world with a post-9/11 “with us or against us” consensus which saw the controversial involvement in Iraq and the 2008 financial crisis. Looking
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