What Trump's win means for the Indian rupee
Subscribe to enjoy similar stories. Mumbai: The Indian rupee is expected to remain under pressure on the back of a strengthening US dollar as Donald Trump wins the presidential race, experts said, prompting the Reserve Bank of India (RBI) to curb volatility in the forex market. On Wednesday, the rupee hit a record low and was trading at 84.28 against the dollar.
A Trump victory implies geopolitical uncertainty amid concerns on the extent of trade tariff hikes he may impose on economies like China. He has promised a 60% tariff on Chinese goods and a loose fiscal policy. “However, in a slowing and fragile global economy, we firmly believe that economics is likely to trump politics," said Kanika Pasricha, chief economic advisor, Union Bank of India.
“In the world that we are living in with limited policy space, especially from fiscal policy perspective, the extent to which Trump may stay true to his poll promises may be curbed in our view." Still, she said, global risk aversion would mean that the rupee may see further pressure after touching fresh record lows on Wednesday. With RBI still holding a significant amount of forex reserves built for rainy days, the central bank would stand ready to curb volatility, she said. India’s forex reserves stood at $684.8 billion as on 25 October, showed data from RBI.
Reuters reported citing unnamed people on 4 November that RBI would be able to tap its foreign exchange reserves to defend the domestic currency in the event of global market volatility and an outflow of foreign funds. “While the initial move of the dollar might be an overreaction, the clear way for the rupee is weaker in a Trump presidency," said Dhiraj Nim, economist and forex strategist, ANZ Research. “In the near term,
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