Trump tramples rupee |
Donald Trump’s victory in the US presidential elections has led to a major re-pricing of assets, with investors rushing to buy US stocks and the dollar, while exiting bonds and emerging market assets. US Fed’s plan to increase the interest rates is adding to the pressure. The withdrawal of Rs 500 and Rs 1,000 notes and its impact on the economy has exacerbated the already parlous situation.Stock markets and the corporates are worried as a volatile rupee can upset their applecart. The Sensex has already fallen 6.27 per cent, or 1,731 points since November 8. Analysts are now expecting spillover effects of demonetisation in the financial markets. Moody’s has said demonetisation would “significantly disrupt economic activity, resulting in temporarily weaker consumption and GDP growth” in the short term.With domestic and global factors turning negative, India is witnessing capital outflows now. Foreign portfolio investors have already pulled out Rs 28,919 crore from India in November with debt outflow accounting for Rs 15,194 crore.
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