Trunk Economics | January 10, 2025
Rupee, H-1B, and Crypto: Trump 2.0 and India
So, with Trump back in the White House, Indians are wondering what's in store for them. Well, read on for a lowdown
BY ALL MEASURES, 2025 PROMISES to be an eventful year. For one, Donald Trump will again assume office as the President of the United States of America.
For India, besides the emerging changes in the geopolitical calculus that Trump 2.0 will likely necessitate, there are a few other co-ordinates that ordinary middle-class folks (who do not track geo-strategic tectonic plate movements), will possibly keep a keen eye on. Trump at the White House the second time around could have tangible bearing on Indians’ spending, aspirations, careers, and investments.
Greenback blues
The dollar is strengthening. The rupee is going at the mid-eighties against the dollar now. Chances are that the rupee could weaken further.
This could pinch. It will fan inflation as the price of anything that is determined in dollars could get dearer—from imported fruits and chocolates, to gadgets and gizmos, to overseas travel and education, to gold, and, most importantly, to crude oil.
Costlier crude will make tanking up your car that much more expensive, and will also knock up prices generally as rising fuel prices would mean the cost of ferrying goods from supply sources to points of sale will go up.
The H1B Hot Button
Then there is the lingering question of H1B visas, a hot-button issue that's close to the hearts of many Indian families. For decades, the US has been the land of opportunity for India's middle class, with many aspiring to join the NRI community and send dollars back home. And let's be real, the H-1B programme has been a game-changer, with Indians snagging over 70% of approved petitions every year since 2015.
But not everyone's happy about it. Some Republican groups claim that tech companies are exploiting the programme to hire cheaper foreign labour, rather than paying American workers a fair wage. They argue that Indians are filling low-to-mid level positions for lower pay, which sounds suspiciously like a dog-whistle for "Indians are stealing American jobs."
Proponents of the H-1B programme, however, say that's just not true. They argue that there's a genuine shortage of top tech talent in the US, and that Indians are simply filling the gap. But critics counter that tech companies are just looking for ways to cut costs, and that American workers are being priced out of the market.
Whatever the truth may be, one thing's for sure - the H-1B programme is a vital lifeline for many Indian families, and any changes to the programme could have far-reaching consequences for India's economy.
Cyrpto’s gold run?
There is gold. There are stocks. There is real estate. And there is crypto. This could well be its moment. Or so the crypto diehards would be hoping. From a sheer anticipation point of view, there couldn’t have been a better state of affairs than Donald Trump’s return as the US President.
For starters, Trump has promised to turn the US into the crypto capital of the world. Trump’s campaign lexicon and phraseology for crypto and digital assets during his campaign trail, and the subsequent choice of people to join his administration who have been unequivocally on the side of crypto legitimacy, have triggered an unprecedented and blazing rally in crypto prices.
For India’s policymakers this could queer the pitch. India has, thus far, assiduously maintained an arm’s length from giving any kind of regulatory legitimacy to any such assets unless these have sovereign backing.
The eRupi, India’s very own Reserve Bank of India (RBI)-regulated digital currency, has a sovereign stamp. Any other digital currency, which promises to serve as a medium of exchange, in effect, operates outside regulatory boundaries in India, carrying the enormous attendant risks.
Like their American counterparts, the legion of crypto diehards in India too would be feeling bullish about the asset’s prospects following Trump’s return as the US President. Their assumption: should things change onto the fast lane for crypto in the US, it would be only a matter of time before India follows a similar path.
But would the correlation be so linear? One would hazard not. Given the RBI’s historically conservative approach to such matters, it may still be a while before cryptos have their moment in India, too.
The rupee’s fall (against the dollar) doesn’t mean the crypto’s rise. It is not a zero-sum game. At least, not as yet.
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