Rupee Set To Weaken By 8-10 Per Cent Under Trump 2.0: What It Means For India’s Economy And Exports

The rupee may depreciate 8-10 per cent against the United States (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 (11 November).

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 US dollar, followed by appreciation.

“The fear that rupee will depreciate sharply is unfounded. During the Trump 1.0, rupee was depreciated by 11 per cent less than it was depreciated during Biden term, still we expect a depreciation of 8-10 per cent during Trump 2.0”, the SBI report noted.

This has two short-term implications - number one, a stronger dollar might result in short-term capital outflows as investors flock to dollar-based assets, and number two, a lower rupee might provide an export advantage, potentially boosting revenues in sectors like textiles, manufacturing, and agriculture.

The report also noted that though the H-1B visa issue persists and, it may impact the Indian IT & ITes sectors this could also, eventually strengthen own domestic manufacturing through “Atmanirbhar Bharat”.

According to the report, India may see shifts in foreign direct investments (FDIs) during Trump 2.0.

"However…India is no longer dependent on the traditional sources of FDI inflows… unlike the recent past, FDI is now coming in many new sectors like non-conventional energy, sea transport, medical and surgical appliances, etc.. This trend could continue thus offsetting the possibility of decline in FDI flows in traditional sectors in Trump 2.0 if any," the report added.

Also Read: US DOGE: Elon Musk, Vivek Ramaswamy To Lead Department Of Government Efficiency In New Trump Administration