New Delhi: The US presidential polls are underway in what is being seen as a tough contest between former US President Donald Trump and incumbent US Vice President Kamal Harris for the job of POTUS. A win for Harris is unlikely to spell a major difference for the global economy compared to a second term for Trump since volatility is expected to remain entrenched owing to the Great Moderation.
Emkay Research visualised 4 scenarios for the US presidential election outcome.
How will US presidential poll outcome impact rupee
In case of a Republican sweep, the Indian rupee is expected to weaken along with the Chinese Yen while maintaining a mid-level position among emerging market currencies. This is likely to be the case even when Trump wins with a split Congress or Harris wins with a split Congress, or even a Democratic sweep. Overall, the US dollar is expected to display an upward bias, according to the Emkay Research note by Madhavi Arora.
Potential impact on Indian bonds
Bear markets may rear their head both in case of a Trump win or a Harris win since the US Fed may delay deeper rate cuts owing to a fiscal expansion, according to the report. However, Indian bonds may gain from a split verdict for the US Congress led by a rally in US Treasury bills.
Bearish run for Indian markets?
Indian equities may witness a short-term rally if Trump wins and Republicans dominate the Congress. However, this is likely to fizzle out soon owing to expectations of a market consolidation. A democratic sweep may make investors nervous. However, any selloffs will be moderated on expectations that India’s core fundamentals will remain unchanged, according to Emkay Research.
According to the report, a split verdict is expected to keep equity markets wobbly over the medium term.
