Donald Trump’s election as the 47th President of the United States brings a fresh wave of policies not only for America but also for the world. Trump’s policies’ impact on India can be both rewarding and challenging. We can expect a big shift, especially in the areas of trade, defence, and strategic cooperation.
His foreign policy approach will shape U.S.-India relations, opening doors to new partnerships while introducing some potential challenges. With Trump focusing on strengthening the American economy, his policy on trade and defence expenditure will impact India’s economic and strategic landscape as well.
On Wednesday, the Indian rupee slipped sharply due to a strengthening U.S. dollar to an all-time low of 84.28 against the dollar in interbank exchange markets. This fall of 19 paise from the previous close continues a trend of currency pressure, as the rupee opened earlier at 84.23, another record low.
Trump’s policies‘ impact on India means the rupee will further deflate!
Experts believe that the fall in the rupee is partially driven by the inflationary policies of Trump, which will make the dollar more strong against all the other global currencies including the rupee. With Donald Trump securing the country’s crucial swing states in this case, the Pennsylvania dollar index, which measures the U.S. currency versus six major world currencies, reached a four-month peak of 105.12.
This index’s upward bounce indicates the increased power that the dollar is exerting not only on foreign currency but also back home to the emerging markets from India to Brazil. The dollar edged higher after US treasury yields rose further to 4.45% against the rupee, which finally closed at 84.28 per dollar on Wednesday, as Anil Kumar Bhansali head of treasury at Finrex Treasury Advisors LLP said.
Is it alarming for the Indian economy?
More fundamentally, the increase in the dollar, which is already trading 1.52% higher at 104.99, is going to have much more serious implications for the Indian economy. A strong dollar may raise import costs and even make India’s trade deficit bigger.
Analysts have been warning that policies from the likely inflation-focused Trump presidency would further weaken the rupee, thereby posing a challenge to India’s foreign trade and investment strategies. The world will anxiously look at what will happen with India as Trump shapes his policy direction.
For the latter, opportunities or risks arising from the potential trade, defence, or economic policies of Donald Trump will significantly decide the Indian economy in the years to come.
Also, see: Five key promises of Donald Trump he vows to fulfill as US President