The Indian rupee continued to tumble to another historic low on Thursday, reaching ₹84.34 against the dollar, pulled lower by the dollar’s rise following Donald Trump’s triumph in the U.S. presidential race.

What’s Next? Analysts suggest that Trump’s win could put additional pressure on the rupee due to his potential inflationary policies that may strengthen the dollar.

Trump secured victory in the election held on November 5, becoming the 47th President of the United States.

While U.S. benchmark 10-year yields stood at 4.40%, the dollar index dipped slightly to 104.99 after it shot up following Trump’s victory. This index measures the strength of the dollar against a mix of six major currencies: the Japanese yen, euro, British pound, Swedish krona, Canadian dollar and Swiss franc.

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The Trump Effect: Trump's poll victory could lead to increased spending in the US, which may keep inflation elevated and further strengthen the dollar, according to analysts. While the Reserve Bank has sufficient funds to weather the storm, the strengthening greenback will likely add more pressure on the central bank, which has already been selling dollars amid a surge in equity outflows.

However, experts are also factoring in the possibility that many of Trump's proposed policies, including tax cuts and tariffs, could lead to higher inflation.

The U.S. Federal Reserve is also expected to announce another 25 basis-point rate cut in a meeting later this week, with further cuts of up to 100 basis points anticipated in 2025.

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