Rupee may depreciate 8-10% during Trump 2.0, says SBI report

SBI report predicts 8-10% rupee depreciation under Trump 2.0, despite all-time low against USD on November 11, 2024.

The rupee may depreciate 8-10% against the U.S.. dollar during the Trump 2.0 regime, said a SBI research report, even as the local currency hit its all-time low on Monday (November 11, 2024).

The report, titled U.S. Presidential Election 2024: How Trump 2.0 Impacts India’s and Global Economy, emphasised that the rupee can have a brief spell of depreciation against the U.S. dollar, followed by appreciation.

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Donald J Trump’s historical comeback as the 47th President of the United States adds a morphine shot to the markets and select asset classes even as the focus is now shifting to wider economic ramifications and supply chain realignments, the report said.

"Trump's victory introduces a mix of challenges and opportunities for India. While the potential for increased tariffs, H-1B restrictions, and a strong dollar could bring short-term volatility...But it also presents India with long-term incentives to expand its manufacturing, diversify export markets, and enhance economic self-reliance," it added.

It further said the 10-year yield shows no obvious trends, and the effect will be context-sensitive, going ahead.

"USD/INR has shown range bound movement, and the rupee can have a brief spell of depreciation followed by appreciation...Volatility in Indian equity markets showing signs of reduction," the SBI's study said.