Presidential Cycles and Exchange Rates

56 Pages Posted: 15 Apr 2024

See all articles by Pasquale Della Corte

Pasquale Della Corte

Imperial College Business School; Centre for Economic Policy Research (CEPR)

Hsuan Fu

Université Laval

Date Written: March 22, 2024


This paper shows that US presidential cycles can predict dollar-based exchange rate returns. Armed with more than 40 years of data and a large cross-section of currency pairs, we document an average US dollar appreciation during Democratic presidential terms and an average US dollar depreciation during Republican presidential mandates. The difference in these average exchange rate returns is larger than 5% per annum and is primarily linked to trade tariffs. In contrast, we find no relationship with cross-country interest rate differentials, inflation differentials, and pre-existing economic conditions. We relate these findings to trade policy within a model of exchange rate determination with constrained financiers.

Keywords: Presidential Cycles, Foreign Exchange, Currency Risk Premia, Tariff, Trade Policy Uncertainty.

JEL Classification: E44; D72; F13; F31; G15; G20; P16.

Suggested Citation

Della Corte, Pasquale and Fu, Hsuan, Presidential Cycles and Exchange Rates (March 22, 2024). Available at SSRN: or

Pasquale Della Corte (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London, SW7 2AZ
United Kingdom
+44(0)20 759 49331 (Phone)


Centre for Economic Policy Research (CEPR) ( email )

United Kingdom

Hsuan Fu

Université Laval ( email )

Pavillon Palasis-Prince
Quebec, Quebec G1V 0A6
418 656 2131 (Phone)

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