Rupee trades below 88 mark on weak dollar ahead of Fed; opens at 87.83/$

Indian Rupee today: The domestic currency opened 23 paise higher at 87.83 against the greenback on Wednesday

The Indian rupee strengthened on Wednesday, trading below 88 against the US dollar, supported by weakness in the greenback ahead of the Federal Reserve’s interest rate decision.

 

The domestic currency opened 23 paise higher at 87.83 against the greenback on Wednesday, according to Bloomberg. So far this financial year, the rupee has depreciated 2.7 per cent against the dollar, while in the calendar year to date, it has weakened 2.62 per cent.

 

The positive sentiment followed a phone call between the Indian Prime Minister and the US President aimed at easing trade tensions. Trump said he had a "wonderful" call with Modi and wished him a happy birthday, in a social media post on Tuesday. Meanwhile, Chief negotiators from India and the US continue negotiations in New Delhi for discussions on the proposed bilateral trade agreement (BTA),

   

The currency was a bit softer today, following recent volatility triggered by broader dollar weakness and attention on India-US trade developments, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. "Market mood remains cautious, with investors closely following the Federal Reserve's policy meeting as dollar softness globally is triggering rupee strength."

 

The rupee is expected to remain volatile today, supported by a softer dollar and Reserve Bank of India (RBI) stance, but downward risks for the rupee persist over the medium term due to persistent external pressures and policy uncertainty, Bhansali said. "Importers can buy his dip while exporters may wait to sell." 

 

The rupee had hit a record low of 88.44 against the dollar last week, pressured by strong dollar demand from importers amid concerns over potential US tariffs. 

 

The dollar index has been hovering near two-month lows amid increased expectations of a Fed rate cut. The dollar may fall further if the FOMC outcome is more dovish than expected, analysts said. The measure of the greenback against a basket of six major currencies was up 0.09 per cent at 96.71. 

 

The US rate-setting panel will announce its policy decision after Indian market hours on Wednesday. 

 

In commodities, crude oil prices edged slightly lower amid heightened supply concerns of supply from Russia and the Middle East. Brent crude price was down 0.19 per cent at 68.34 per barrel, while WTI crude prices were lower by 0.17 per cent at 64.41 per barrel, as of 9:10 AM IST.