Trump effect? Chinese yuan dips 2.6% in a month, rupee depreciates 0.7% since US election

Rupee has been relatively better against the greenback

Donald Trump winning the US presidential election has sent emerging market currencies tumbling against the greenback.

While the Chinese yuan had strengthened 0.6 percent against the dollar in 2024, until November 5, it had depreciated 2.6 percent since Trump’s election to office.

India’s currency had a better showing compared to other emerging market peers. The rupee had depreciated 0.95 percent in the 10 months till November 5 but fell further 0.73 percent within a month of the US Republican candidate becoming the president-elect.

The rupee touched a new low on December 2, closing at Rs 84.7 against the dollar, after fears that the incoming US president would impose import tariffs.

Trump also threatened on his social media platform Truth Social that any move towards a unified BRICS currency for international trade would invite 100 percent tariffs for countries within the grouping. He has already talked about imposing tariffs on China, Canada and Mexico.

The rupee's 0.7 percent depreciation, however, pales in comparison to the Indonesian rupiah, Brazilian real and South African rand.

The rupiah has fallen 1.24 percent since the election, while the real has declined 4.91 percent. The rand has fallen 3.58 percent in the month since the US election result was declared.

The dollar index, which tracks the performance of the US currency against a basket of currencies, is down 2.5 percent since the election.

While the Vietnamese dong has performed better in the month since Trump's win, with just 0.3 percent depreciation against the dollar, a comparison from the start of the year shows that the Indian rupee is the best-performing currency among its peers.

Relatively stable

The rupee has been relatively stable compared to other emerging market currencies. Since the beginning of 2024, it has depreciated 1.7 percent, while the rupiah has fallen 3.1 percent, the dong 4.4 percent and the yuan 2.1 percent.

The real has depreciated 23.4 percent since the start of the year.