Experts have argued that Indian Rupee’s stability could take a hit if PM Modi is not re-elected in the upcoming General Elections 2019 and that rupee could depreciate against to well past 75, reports Business Standard (BS).

“The rupee could weaken past 75 per dollar if Modi failed to win a second term,” said Prakash Sakpal, an economist at ING Groep NV in Singapore.

Comparing the prospects of Indonesia’s national currency vis-a-vis rupee over the next few months, Rainer Michael Preiss, an executive director at Taurus Wealth Advisors Pte said, “The rupiah offers a better risk-reward for investors than the rupee. With regard to Indonesia, our view is that consistency is good. If Modi doesn’t get re-elected, some people might think this is a negative and that could lead to more volatility in the rupee.”

Like India, Indonesia will also go to polls in April and opinion polls show that incumbent Indonesian President Joko Widodo will win the re-election bid. However, PM Modi is expected to face a stronger challenge from the opposition.

Political Stability Is Good For Business

It should be noted political stability and continuity is one of the crucial factors determining a currency’s performance in the forex market. Continuation of market-friendly policies by the NDA government will attract foreign direct investment (FDI) into India, thereby reducing rupee’s volatility.

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