Rupee Fell All Time Low Against US Dollar Amid Trump's Victory

Rupee fell all time low against US Dollar amid Trump's victory

The Indian rupee has hit its all-time low against the US dollar. The rupee had fallen to 84.2950 on November 7, 2024. This had primarily been because of the surge in the dollar following early election results that showed a victory of Donald Trump in the US presidential race. Expectations of tax cuts and protectionism from a new administration led by President Donald Trump, which is seen as better for the US economy, caused the dollar to rise dramatically. Bloomberg Dollar Spot Index gained 0.9% to reach a July high.

RBI is “slowly letting it (USD/INR) move higher but the upside should be limited near 84.40 in the near term”- A trader at the state-run bank said.

Analysts predicted that Trump's tax cuts and deregulation would boost the U.S. economy and make investors favor the dollar over other currencies, while the prospect of tariffs would likely hurt the euro and Asian currencies.

 

Impact of Trump's Returns on Global Market

The shocking turn of events in the global political scene with Donald Trump winning against Kamala Harris rattled the financial markets across the world. By the 6th of November, as the first results of the elections were being reported, almost all stocks across the globe were on the rise: the S&P 500 Index increased by 2.5% and the Dow Jones Industrial Average went up by 3.6%. Bitcoin skyrocketed hitting an all-time high of $75,397 which is a relief for those who anticipated well about the crypt-to-currency Trump would incite.

 

The dollar index was reported to have risen by about 1.5% to a four-month high of 104.9 since safe assets were more sought after due to concerns over changes in policies that would be instituted by the Trump administration should he win. It was opined that if Trump wins that would be in American tariffs on imports, particularly Asian countries, which would heat over trading issues and support the United States dollar thereby higher pressure on other country's dollars like India’s.

 

Global Market Reactions

Global stock markets have rebounded to strong positive momentum following Trump's victory. The rally was not strictly limited to US markets; European shares also made ground as investors turned their attention away from the prospect of trade tensions for now. The small-cap Russell 2000 index rose more than 6%, which indicated a high level of investor confidence in domestically focused companies that are likely to perform well under a Trump administration.

 

Not all industries are equal beneficiaries. Renewable energy stocks have dropped as Trump is likely to wipe out most of the Climate policy by Biden. This change has made investors rethink future growth in that sector.

 

Which Indian commodities Prices could increase?

Cooking Oil

60% of India's edible oil is imported. This staple's import prices, which were 16.71 million tons last year, are expected to increase.

Petrol and Diesel

Expect fuel prices to rise as more than 80% of crude oil is imported, which will affect the cost of transportation and everything else.

Domestic Appliances and Electronics

The cost of your iPhone will increase. Although the majority of the chips and components for devices made under the Make in India initiative are imported, the devices are assembled in India.

Drugs

Raw ingredients for necessary pharmaceuticals are imported into India.

Automobiles 

Imported metals and auto parts raise the cost of cars, particularly luxury models.

 

Education Abroad

Higher tuition and living expenses for overseas students result from a declining rupee.

Flying 

Both domestic and international flights will become more costly due to rising fuel prices.

Gold

India is among the largest importers of gold, and the price will only rise.

 

Conclusion

In a nutshell, Donald Trump's victory has caused a shockwave in the global financial markets, strengthening the US dollar while applying pressure on the Indian rupee. It could lead to a hike in the prices of necessary items from fuel to cooking oil, electronics, and even foreign education. The Reserve Bank of India will intervene; however, the rise of the dollar will impact the economy. For now, Indians will have to be prepared for increased costs in everyday survival.

 

Disclaimer- No investment advice or suggestion is given. No buy or sell recommendation. Things mentioned might not be the same in the future. Prices of commodities might go up or down in the future. Discuss with your eligible financial advisor before investment. This blog is only for information and educational purposes.