Effect of President Trump’s Proposed Tax Reforms on the Naira

While the Nigerian Naira is at the time of writing unchanged against the Dollar at 380 on the Parallel Exchange, the Greenback is slightly pressured against most of its counterparts across the financial markets, following the lack of detail Donald Trump’s proposed tax reforms have offered investors.

Although the prospect of cutting corporate tax to 15% from 35% may entice international businesses to move their operations towards the United States and consequently punish emerging economies like Nigeria, these fears may truly materialize if the tax reforms are passed through Congress.

With concerns already elevated over the proposed tax cuts creating a potential 2.4$ trillion hole deficit over the next 10 years, Trump may face headwinds further down the road.

The threat of Trump’s suggested tax reforms having a similar fate as that of his failed healthcare reform proposal may expose the Dollar to further losses moving forward. A weaker Dollar could inspire Naira bulls on the parallel exchange in the short term.

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