‘Buy American and Hire American’ has been one of US President Donald Trump’s slogan and now it is being said that it might rock the markets and also weaken the rupee as his relentlessly protectionist rhetoric shows no signs of being muted by ascent to office.According to experts, the rupee may sink to the new lows of 70 against the dollar in the next few months. The rupee can go down to as much as 3%.
"Expect dollar to strengthen over next three to six months as Trump unveils his policies. Rate hikes could come faster if he resorts to fiscal stimulus path for growth. All emerging market (EM) currencies including the rupee will come under pressure," MS Gopikrishnan, head of foreign exchange, rates and credit at Standard Chartered Bank, told ET.
Experts also feel that events like Brexit and Trump’s election will only cause harm to rupee value. A nervous Dalal Street is pinning hopes on the budget next week as an opportunity for the government to calm investors.
"The markets can be weak in the coming days leading up to the budget. If the dollar keeps strengthening, FIIs (foreign institutional investors) would look to sell some more," said Mahesh Patil, co-chief Investment officer, equity, Birla Sun Life Mutual Fund.
Domestic events such as the February 1 budget and the state elections are being keenly watched and could fuel the uncertainty, depending on how they're received.