Rupee halts 4-day rally amid mixed Fed cues; ends weaker at 88.13/$

Indian Rupee today: The domestic currency closed 32 paise lower at 88.13 against the greenback on Thursday

The Indian Rupee snapped a four-day winning streak on Thursday as the dollar gained after the US Federal Reserve slashed the interest rates by a quarter percentage point amid mixed signals. 

 

The domestic currency closed 32 paise lower at 88.13 against the greenback on Thursday, snapping its four-day winning streak, according to Bloomberg. So far this year, the rupee has depreciated 2.94 per cent, making it the worst performer among Asian peers.

 

Rupee traded weak despite the dollar index staying soft post-Fed policy, as forward rate cut guidance remained mixed, analysts said. 

   

The roadmap for further cuts by the Fed was unclear and data-dependent on jobs, Jateen Trivedi, VP research analyst - commodity and currency at LKP Securities, said. 

 

The rupee failed to gain as foreign institutional investor (FII) sentiment remained cautious, while ongoing India-US trade talks will be the next key trigger, he said. "Support for the rupee lies near 87.75, while resistance is seen at 88.25."

 

Jerome Powell cut interest rates by 25 basis points and pencilled in two more reductions this year. Powell said that the labour market is showing growing signs of weakness, stating that revised job numbers mean it is no longer "very solid." 

 

"Uncertainty about the economic outlook remains elevated... The Committee is attentive to the risks to both sides of its dual mandate (unemployment and inflation management) and judges that downside risks to employment have risen," the Fed statement read. Going ahead, the Fed dot plot indicated two more rate cuts in the rest of 2025, one cut each in 2026 and 2027, and no cuts in 2028.

 

The dollar index recovered after it tumbled to a 43-month low immediately after the policy announcement. The measure of the greenback against a basket of six major currencies was up 0.1 per cent at 96.88.

 

Going ahead, the Bank of Japan will kick-start its two-day policy meeting, the UK will announce its interest rate decision, and the US will release its weekly jobless claims report later today. 

 

In commodities, crude oil prices were trading lower as rate cuts were fully anticipated and factored in by the traders. Brent crude price was down 0.75 per cent at 67.44 per barrel, while WTI crude prices were lower by 0.78 per cent at 63.55 per barrel, as of 3:35 PM IST.