The dollar dropped to a 3-month low amid concerns about the negative effects of US tariffs on the economy, with the losses being particularly significant against the euro.

The Bloomberg Dollar Spot Index fell by as much as 0.6% on Wednesday, reaching its lowest point since December 9. The euro stood out as one of the top performers against the greenback, rising to $1.07, a level not seen since November 11, following Germany’s announcement of plans to increase defence and infrastructure investments.

US Trade Tariffs Raise Fears of Global Economic Slowdown

The dollar has been weakening this week as the US implemented trade tariffs on Canada and Mexico, heightening fears that a global trade war could harm economic growth and compel major central banks to cut interest rates even further. Swaps now suggest 71 basis points of easing from the Federal Reserve by year-end, up from 66 basis points on Friday.

“The US economy could slow further, forcing the Fed to restart its easing cycle in the latter half of the year,” said Valentin Marinov, head of global FX strategy at Credit Agricole CIB. “The Fed may also have to halt its quantitative tightening program to accommodate President Trump’s fiscal spending plans, which could diminish the USD’s exceptional status.”

US moves to reduce its defence presence in Europe have spurred European leaders to quickly enhance military capabilities. Germany plans to unlock hundreds of billions of euros for defence and infrastructure, causing a surge in the euro and a decline in the country’s bonds.

Conclusion

The dollar’s decline to a three-month low reflects growing concerns over the economic consequences of US tariffs and the potential for a global trade war. As the US implements new trade measures and faces possible economic slowdown, the Federal Reserve may be compelled to ease interest rates further.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

ICRA, a rating agency, stated on March 5, 2025, that raising the deposit insurance limit could reduce banks’ net profits by up to ₹12,000 crore annually. This would result in a potential dip of up to 4 basis points (bps) in the return on assets (RoA) and up to 40 bps in the return on equity (RoE).

Furthermore, if the insurance premium is increased, the overall impact on RoA and RoE could reach up to 7 bps and 68 bps, respectively, according to ICRA’s statement.

Potential Changes in Insured Deposit Ratio (IDR)

Although the specifics of the proposed increase in the deposit insurance limit remain unclear, the insured deposit ratio (IDR) could rise to between 47.0% and 66.5% under different scenarios. The IDR, which is the ratio of insured deposits to assessable deposits, stood at 43.1% as of March 31, 2024, compared to 44.4% on March 31, 2023.

In February 2020, the Deposit Insurance and Credit Guarantee Corporation (DICGC) increased the deposit insurance limit from ₹1 lakh to ₹5 lakh per depositor per institution. This topic has gained attention following the recent failure of a cooperative bank. Additionally, there is a possibility that the insurance premium could rise to ₹0.15 per ₹100 deposit (from the current ₹0.12), subject to approval from the Reserve Bank of India (RBI), to strengthen the DICGC’s Deposit Insurance Fund (DIF).

As of March 31, 2024, 97.8% of the total eligible/assessable accounts were fully covered, with the remaining 2.2% partially covered up to the ₹5 lakh coverage limit, the rating agency added.

Conclusion

The potential changes in the deposit insurance limit and premium could significantly affect banks’ profitability, with a moderate impact on their financial metrics. While the proposed adjustments aim to strengthen the Deposit Insurance Fund, their effect on the banking sector’s financial health should be closely monitored, especially considering the balance between providing enhanced deposit protection and maintaining banks’ profitability.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

In his first speech to a joint session of the US Congress, President Donald Trump aimed India’s import duties, accusing the country of imposing tariffs that are detrimental to US businesses. Specifically, Trump pointed out that India levies automobile tariffs exceeding 100%. His remarks were part of a broader criticism of trade imbalances and unfair tariffs from other countries around the world, which, according to him, have been taking advantage of the US for decades.

Trump’s Strong Words on Tariffs

During the address, Trump made it clear that the US would be introducing reciprocal tariffs starting April 2. He stated that for too long, the US had been taken advantage of by other nations and pledged to change that dynamic. “Under the Trump administration, you will pay a tariff, and in some cases, a rather large one,” he said, emphasizing that the US would no longer be subjected to unfair trading practices.

Trump’s speech focused on the high tariffs imposed by countries like the European Union, China, Brazil, India, Mexico, and Canada. He claimed that the US is charged significantly higher tariffs than these countries charge the US, with India’s auto tariffs being among the highest. Trump was unequivocal, stating that it was time for the US to start using tariffs to balance the playing field.

A Look at the US-India Trade Relationship

Despite the contentious remarks on tariffs, the US remains India’s largest trading partner, and the trade relationship between the two countries is flourishing. In FY24, bilateral trade between India and the US reached a record US$ 118.2 billion. This growth comes in the face of Trump’s rhetoric, as India maintained a trade surplus of US$ 36.8 billion with the US during the same period.

India’s major exports to the US include engineering goods, electronic goods, gems and jewellery, pharmaceutical products, petroleum products, and crude oil. These exports have significantly contributed to the growing economic ties between the two nations.

India’s Exports to the US

India’s export profile to the US is diverse and robust. In FY24, India exported over 7,000 commodities to the US, with engineering goods leading the charge at US$ 17.6 billion. Other significant exports included electronic goods (US$ 10 billion), gems and jewellery (US$ 9.9 billion), and pharmaceutical products (US$ 8.72 billion). Petroleum products also made up a large portion of exports at US$ 5.83 billion.

From April to November 2024, India’s exports to the US amounted to US$ 52.95 billion. The major exported items during this period included engineering goods (US$ 12.33 billion), electronic goods (US$ 6.79 billion), drugs and pharmaceuticals (US$ 6.34 billion), and gems and jewellery (US$ 6.28 billion).

Imports from the US to India

On the flip side, India’s imports from the US have also shown significant growth. In FY24, India imported US$ 40.7 billion worth of goods from the US. Key imports included mineral fuels and oils, valued at US$ 12.9 billion, followed by pearls, precious stones (US$ 5.16 billion), nuclear reactors and machinery (US$ 3.75 billion), and electrical machinery (US$ 2.38 billion).

From April to November 2024, India’s imports from the US reached US$ 29.63 billion, with mineral fuels and oils still being the largest category. Other major imports included pearls and semi-precious stones, nuclear reactors, and electrical machinery.

Conclusion

As the US and India continue to engage in trade discussions, President Trump’s remarks about tariffs and trade imbalances signal a new phase in their economic relationship. Whether or not tariffs will be imposed in the coming months, the US-India trade partnership remains strong, with both nations seeing mutual benefits in various sectors.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

The tariff conflict that has intensified over the past few days has drawn attention to all sectors and the potential consequences such actions could have on them. According to a report from FTR Transport Intelligence, Class 8 trucks in North America may face a considerable increase in costs if the tariffs remain in place.

The transport agency highlighted that up to 40% of Class 8 trucks in the US are manufactured in Mexico, while 65% of Canada’s Class 8 trucks are produced in the US. In response, Canada plans to impose counter-tariffs on trucks, steel, cars, and other products over the next three weeks.

“Tariffs and counter-tariffs will disrupt supply chains and raise vehicle prices,” the FTR report stated.

This development also draws attention to Bharat Forge, which has exposure to the US Class 8 truck market.

Despite a decline in US Class 8 truck orders for the 5th consecutive month, Bharat Forge’s shares rose by over 2% on Wednesday, March 5, 2025. North American Class 8 truck orders dropped 34%, from 25,700 units in the previous year to 17,000 units, and fell 29% from the prior month’s 24,000 units.

Bharat Forge Business Segments

Automotive Business: The Indian commercial vehicle (CV) sector has experienced strong growth over the past 3-4 years, both in terms of total numbers and tonnage. However, for the first nine months of FY25, a large base effect combined with a slowdown in capital expenditure growth has resulted in subdued demand for the sector and its CV business. The long-term outlook remains positive, and the company continue to explore both organic and inorganic opportunities to strengthen its position in the CV space.

The domestic passenger vehicle (PV) market has rebounded significantly on a year-over-year basis, driven by increased penetration. The company is focused on establishing new partnerships to capture long-term growth opportunities in personal mobility, especially with customers shifting towards more premium and safer vehicles.

Industrials Business: The Industrial segment reported revenues of Rs 5,126 million. The decline, both sequentially and annually, is primarily due to reduced defence sales during the quarter. Despite the cooling momentum in capital expenditure, which may impact its industrial business in the short term, the company believe sectors such as nuclear and space present substantial opportunities for medium to long-term growth in its industrial revenues.

 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.