Volatility is here to stay

RBI must take a strong stand before the rupee hits, or even threatens, 90 and brings a vision of ₹100 to the dollar, which could further scare a skittish global investor community

- JAMAL MECKLAI

IT IS a cliché that in international relations there are no permanent friends, only permanent interests; however, Donald Trump's rude style of operation is certain to set US interests back for a long time, perhaps even a decade or more.

There are several analysts who contend that his tariff attack on India is really part of a broader game he is trying with Russia. But he has clearly pushed the wrong buttons there since whatever he thinks he is offering Russia doesn't seem to have any relationship with what Putin really wants. In any case, given his unpredictability, none but the truly desperate would reach out in response since he may well change his tune again.

This explains why India cannot—and will not—give in to his bullying, irrespective of the impact it has on our economy, which, while serious, will not break us. This is even though, on a pure numbers basis, it may appear sensible to give up $2-3 billion of gains (given the currently sharply reduced discount on Russian oil) in return for substantial savings (of the order of $30-35 billion) on potentially lost exports. Of course, he may pile on the pressure, targeting pharma or IT services next, and then again, he may relent and come back to the 25% tariff level. It's shocking how this now seems like it would be a reasonably acceptable outcome—score one for Trump's Art of the Deal!