Trump Election Impact on the Kenya shilling

Global stock markets were plunging Wednesday as investors move their money into safe havens like gold as traders react to an impending presidency.
World markets were wildly volatile through election night in the U.S., with stocks, currencies and bonds swinging as investors factored in the reality that the Republican businessman could best Democrat in the 2016 U.S. presidential race.Trump, who has never held public office, defeated Clinton to be elected the 45th president of the United States on Wednesday, the Associated Press reported.Wall Street had been pricing in a Clinton win.
Japan's Nikkei 225 plunged 5.4% while Hong Kong's Hang Seng index lost 3.2% Futures on the Standard & Poors 500 index hit a trading halt designed to limit losses and were recently down more than 4%.

The was down about 638 points, or 3.4%, in futures trading. If the Dow's losses stick when regular trading resumes Thursday, the point loss would top the 610-point drop back on June 24, when the United Kingdom voted to exit the European Union, a crisis known as Brexit. The Dow's current level would also challenge the record one-day plunge of 777.68 points back on Sept. 29, 2008, during the financial crisis.
“What the market is telling us is that all of a sudden the chance of a Trump win is very real,” says Brad McMillan, chief investment officer at Commonwealth Financial Network. “Trump winning introduces a lot of policy uncertainty,” on issues ranging from trade to immigration to tariffs.
Investors are rushing into perceived havens, such as gold, which is up $40 an ounce, or 3.1%, to $1314.

The Trump strength in the election was similar to what happened during the surprise Brexit vote, which was characterized by untrustworthy polls, rising populism and an angry electorate.

The election of Donald Trump may portend good news for the Kenya shilling in the long run despite the uncertainty around his presidency. After the announcement of Trump as the President-elect yesterday, the shilling held firm, with Bloomberg tracker quoting the local currency at 101.50 against the dollar, compared with Tuesday’s close of 101.70/80. Analysts said Trump’s election signals the Federal Reserve (the Fed) - the US Central Bank - may hold interest rates in December, which might prove a boon for the shilling. 

 
This is good news for the local currency because the impact of a rate hike in the US on emerging markets would include huge capital outflows as money trickles back to the stable economy and the dollar strengthens further. A stronger dollar does not not sit well with importers as they are forced to pass the extra cost of imports such as motor vehicles and food stuff to consumers. Analysts point out that Trump’s victory comes with a lot of uncertainties and is likely to be followed by market volatility that could decrease the likelihood of a Fed rate hike by 25 basis points in December.