A Donald Trump victory in the US presidential election would be negative for all emerging markets, including India. It would create demand for safe-haven bets like gold and developed-world bonds.
Currency market is bracing for volatility even if Hillary Clinton secures a win as Trump has not cleared the air on whether he would accept the election results should he lose in a close finish.
"Even if Clinton wins, Trump may continue to push her and stoke uncertainty. If Trump wins, everything will fall and volatility will shoot up. This is not a time to take risk," said Jamal Mecklai, chief executive of Mecklai Financial, a currency consultancy firm.
Sensex, which has come off three per cent in the past fortnight, is likely to drop further as Trump's victory could see a Brexit-like knee-jerk reaction from investors, say analysts. US bond prices will rally as investors would dump emerging market bets and that would impact the Indian bonds. Similarly, dollar will strengthen on increased inflow in US assets. This may lead to a sharp depreciation of the rupee and other emerging market currencies. For now, local bonds and currencies markets are stable.
No comments:
Post a Comment