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As we have learned over the last few years, geopolitical risks have become leading themes driving financial markets. This year there are nearly 100 elections around the world, but we believe that a few may impact markets more than others. Here are five upcoming elections that may matter most, and how their currencies may be affected.
INDIA
Election Day
The Indian election will take place between April and May. With about 875 million people able to vote, this is the world’s largest election. Vote counting can take weeks.
Prediction
The Bharatiya Janata Party (BJP) is the favorite to win.
Currency
The Indian rupee weakened last year to a high of INR 74.39 to the dollar in October. Since then, it’s rallied, and is now trading near 69.00. The implications for the currency from the election are not clear, but the current strengthening trend of the rupee ahead of the election may indicate there’s more to come.
Bottom line
Two of the most significant issues on the campaign trail are India’s increasing unemployment and farmer distress. PM Modi of the Hindu nationalist Bharatiya Janata Party (BJP) has not been overly convincing in how he plans to solve these and other issues, but he has shown good leadership in de-escalating the conflict with Pakistan last month.
EUROPE
Election Day
The European parliamentary elections will take place May 23-26.
Prediction
Anti-Europeans are on track to win more than one-third of seats, so the stakes are unusually high. The mainstream center-right, however, is set to remain the biggest group.
Currency
There should not be any impact to the euro.
Bottom line
There are 10 political groups that will form different coalitions. The latest poll released on March 18 indicates the right-wing parties will make strong election gains.
ISRAEL
Election Day
The Israeli election will take place on April 9.
Prediction
Prime Minister Netanyahu has fallen in the polls, but he is still ahead of the Blue and White, a political alliance representing all citizens on the political and religious spectrum. Netanyahu came out recently promising to spend billions on health, education and transportation.
Currency
Should the Blue and White party be elected, it could have a negative impact on the shekel, as government debt would increase significantly unless other measures like higher taxes, are brought in.
Bottom line
There are 14 different parties. How the promise of more spending will affect the polls it is too early to say. Saying that the rest of the picture is messy would be an understatement, as Netanyahu is under pressure from accusations of bribery and corruption.
POLAND
Election Day
The Polish parliamentary election is scheduled to take place before November.
Prediction
The center-right and incumbent Christian Democratic Party will most likely win.
Currency
Not much controversy here, so the election should minimal impact on the zloty.
Bottom line
Voters will choose the head of state in 2020. In the latest poll, the Law and Justice Party (conservative party) and the PiS (Christian Democrat) party should account for about 54 percent of the vote with rest split between the other 7 parties.
UKRAINE
Election Day
Parliamentary elections will be held October.
Prediction
Eight to ten parties could earn enough votes to get into the Ukraine Parliament. There will likely be a coalition formed by the parties that come out on top.
Currency
The hryvnia has been tracking sideways in a 4-hryvnia range either side of 27 since 2016. Unless there is a real upset, it should continue to stay in this range. After the civil unrest in 2014, the hryvnia jumped from about 10 to the dollar to 27.10 today.
Bottom line
Due to the annexation of Crimea by Russia in March 2014, the number of parliamentary seats will fall to 424 from 450. There are seven political parties vying for seats, the Petro Poroshenko Bloc being the largest.
Contact us
If you have questions about how the Indian rupee volatility may affect your global business, contact your FX Advisor directly, or email us at fxadvisors@svb.com
Learn more
Read our recent FX Market Insights and Risk Advisory articles:
- Five themes that matter to FX markets
- Why passive FX management falls short
- How currency movements can affect your global business
- See all our foreign exchange services
This article is intended for US audiences only.
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