The rupee weakens to 85 per dollar following the US Fed’s indication of fewer rate cuts in 2025
The Indian rupee fell to a record low for the third straight day as traders adopted a risk-averse stance ahead of the US Federal Reserve’s rate cut decision due later on Wednesday. The rupee ended the day at 84.952 per US dollar, weakening by five paise from its previous close of 84.895.
Dollar sales linked to local equities added further pressure on the currency. Traders indicated that the Reserve Bank of India (RBI) likely intervened in the market to curb excessive volatility.
Markets have fully priced in a 25-basis-point rate cut by the US Federal Reserve, expected after market hours on Wednesday. However, a cautious tone from Fed officials could intensify pressure on the rupee, traders noted.
“There are inflationary pressures in the US market, prompting expectations of hawkish Fed commentary. Rising US bond yields due to higher inflation also support the dollar,” said Anindya Banerjee, head of currency research at Kotak Securities.
Investors are now watching for potential revisions to the Fed’s rate cut projections for 2025, compared to the September forecast, when officials projected interest rates to fall within the 4.25% to 4.50% range by year-end.
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