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Rupee At All-Time Low: Analysts say Donald Trump’s win in the US presidential elections is likely to affect the rupee adversely as his inflationary policies might push up the dollar.
Though Donald Trump’s victory could affect the rupee adversely, analysts say currency adjustments can well be managed with the reserves India has built.
The Indian rupee on Wednesday hit its all-time low of 84.25 to a dollar due to a rise in the greenback amid the US presidential elections. Analysts say Donald Trump’s victory in the US is likely to affect the rupee adversely as his inflationary policies might push up the dollar.
“The dollar index rose after Trump went up in the US elections initial results and was also leading in the Senate and House,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Donald Trump is on course to win the US elections, which took place on November 5. So far, as of 1305 IST, Kamala Harris has 188 electoral votes and Trump 266.
Following the reports of his victory, the dollar index was trading 1.52 per cent up at 104.99. The dollar index gauges the American currency’s strength against a basket of six currencies — Japanese yen, euro, British pound, Swedish krona Canadian dollar, and Swiss franc.
At the interbank foreign exchange, the rupee on Wednesday opened at an all-time low of 84.23 against the greenback, registering a fall of 14 paise over its previous close. It further fell to 84.25 as of 1308 even as Trump’s victory becomes more clearer.
Rupee At All-Time Low: ‘US Dollar To Be Stronger During Donald Trump’s Presidency’
Anitha Rangan, economist at Equirus, said, “The US election results suggest that Donald Trump is leading the race, although any winning candidate would need at least 270 seats to call it a day. Going by the results, Donald Trump’s victory could likely result in more spending in the US, which could translate into inflation remaining somewhat elevated. At the same time, it would also mean a stronger dollar.”
Currency adjustments can well be managed with the reserves India has built, she added.
According to a note by DBS Bank chief economist Taimur Baig and its senior economist Nathan Chow, “Perhaps one can make the case that Trump’s policies of tax cuts and tariffs would be more inflationary.”
On Tuesday, foreign institutional investors (FIIs) were net sellers in the capital markets, as they offloaded shares worth Rs 2,569.41 crore, according to exchange data.
Moreover, the US Federal Reserve is expected to announce a rate cut in a meeting scheduled later this week, with further easing of up to 100 basis points projected for 2025.
Brent crude, the global oil benchmark, fell 0.97 per cent to USD 74.56 per barrel in futures trade.
