the inauguration of Donald Trump as US President and comments made by him during his maiden speech as the new leader of the world's largest economy could send ripples across global financial markets.
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The new US president’s assertion that he would propagate a policy of “Buy American, hire Americans” may particularly not be good news for emerging economy equities and currencies. Experts feel the rupee could fall to as much as 70 against the US dollar in the coming months as a fallout of Trump's protectionist policies, experts quoted by an Economic Times report said.
A combination of Trump’s policies and a falling Chinese yuan could send the rupee down by as much as 3 percent, according to analysts. Further, foreign institutional investors would look to sell more and interest rate hikes could come faster if Trump resorts to fiscal stimulus path for growth, they added.
The dollar index has gained more than 3 percent since Trump was elected to office on November 8. Between the second week of November and now, the rupee has ranked ninth in the emerging market pack in terms of total investment returns, according to Bloomberg data.
The impact is not expected to be limited to currency markets: equity markets and Indian businesses will be keenly watching Trump policy announcement in the coming weeks.
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