Rupee slips 21 paise to 88.43 against US dollar as Fed signals cautious stance on rate cuts
Mumbai: The rupee weakened by 21 paise to 88.43 against the US dollar in early trade on Thursday, pressured by the greenback’s strength after US Federal Reserve Chair Jerome Powell indicated that a December rate cut is not guaranteed.
Forex traders said the dollar index climbed to 99.05, while the US 10-year Treasury yield rose to 4.07 per cent despite the Fed’s 25-basis-point rate cut overnight.
At the interbank foreign exchange, the rupee opened at 88.37 before slipping to 88.43, down 21 paise from its previous close of 88.22 on Wednesday.
“The dollar index strengthened to 99.02 after the Fed Chair stated that another rate cut this year is ‘not a foregone conclusion,’ helping the dollar find support even after the rate reduction,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
He added that markets are assessing the impact of the ongoing US government shutdown and mixed economic data.
Meanwhile, the dollar index, which measures the greenback’s performance against a basket of six major currencies, was trading at 99.06. Brent crude futures, the global oil benchmark, eased 0.25 per cent to USD 64.75 per barrel.
Bhansali noted that while Asian currencies were generally trading higher, the rupee could recover if positive developments emerge in Indo-US relations.
On Wednesday, US President Donald Trump said he respects Prime Minister Narendra Modi and that “a great deal” is expected with India. “On such a day, the rupee could gain by 40-50 paise,” Bhansali said.
In domestic equities, the Sensex dropped 297.96 points to 84,699.17 in early trade, while the Nifty fell 90.05 points to 25,963.85. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,540.16 crore on Wednesday, according to exchange data.
