New Delhi: US President Donald Trump's 'Buy American and Hire American' slogan may hit the markets and weaken the rupee, The Economic Times has said.
The daily claimed that Trump's quest for a strong dollar could undermine the rupee, sending it down by as much as three percent to the greenback. Domestic events such as the February 1 budget and the state elections could also have an impact on the rupee.
"Expect dollar to strengthen over next three to six months as Trump unveils his policies," MS Gopikrishnan, head of foreign exchange, rates and credit at Standard Chartered Bank, told the paper.
"Rate hikes could come faster if he resorts to fiscal stimulus path for growth. All emerging market currencies including the rupee will come under pressure," he added.
While Brexit and Trump's election did not hit the markets as predicted, Dalal Street is pinning hopes on the budget next week as an opportunity for the government to calm investors, the paper said.
"The markets can be weak in the coming days leading up to the budget," Mahesh Patil, cochief Investment officer, equity, Birla Sun Life Mutual Fund told the Economic Times. "If the dollar keeps strengthening, FIIs (foreign institutional investors) would look to sell some more."
A strong showing by the opposition in the state elections in February and March could further undermine sentiment, he added.
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