Dollar strengthened due to Donald Trump factor, rupee fell the least compared to other currencies

New Delhi| Since Donald Trump was elected President of the US in November, 2024, the dollar has been continuously strengthening and currencies around the world are seeing a tremendous decline. The rupee has also fallen three percent since November, but this decline has been the lowest compared to other currencies. That means, despite the Trump factor, the Indian rupee has remained stable against currencies around the world.

SBI’s research report says that the impact of Trump factor on the fall of rupee is a short-term event. There is factual evidence that the Indian currency will stabilize in the coming months, that is, the effect of the Trump factor will end. The dollar index has gained 6.4 percent from November 5, 2024, to January 13, 2025, due to strong demand for the US dollar. South Africa’s currency, the Rand, has fallen the most by 10.4 per cent over this period.

According to the research report, RBI has sold $70 billion in three months to arrest the fall in rupee. In September, 2024, the country’s foreign exchange reserves had reached an all-time high of $705 billion, which is currently around $635 billion. According to an estimate, if the RBI had not intervened in the market, the rupee could have fallen by about 4 per cent since November to close to 88.

This is a financial development following the US Federal Reserve’s announcement in 2013 of a reduction in bond buying activities. There were fluctuations in global markets after this announcement. Bond yields had increased during the tapered trend and emerging market currencies had also declined sharply.

According to the report, analysis of the tenure of US presidents since the Richard Nixon era shows that the rupee’s performance has been more stable during the Republican administration than during the Democratic administration. However, the current instability ‘taper does not reflect the intensity of the tantrum’ era. This strengthens the assumption that ‘trump tantrum’ for Rs will be a transient phenomenon. After initial fluctuations in this, the Indian currency will stabilize.

The government had a record cash balance of Rs 5.03 lakh crore as of June 21, 2024 in the current financial year, which dropped to Rs 15,773 crore on December 6, 2024. However, due to advance tax, the cash balance of the government increased to Rs 2.69 lakh crore by January 10, 2025.