Rupee trades stronger with Fed meet this week; opens higher at 88.25/$

Indian Rupee today: The domestic currency opened 3 paise higher at 88.25 against the greenback on Monday

The Indian Rupee traded with marginal gains on Monday as traders turned their focus to the Federal Reserve meeting this week. 

 

The domestic currency opened 3 paise higher at 88.25 against the greenback on Monday, according to Bloomberg. So far this year, the rupee has depreciated 3.10 per cent, making it the worst performer among Asian peers.

 

The currency remains near record highs, with the pair currently opening around 88.20, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP. 

 

The unit's constant pressure is offset by likely Reserve Bank of India (RBI) interventions to curb volatility and prevent sharp depreciation, Bhansali said. Market participants estimate the RBI may have sold $5–6 billion recently to support the rupee.

   

Elevated US tariffs on Indian exports and ongoing trade frictions have triggered foreign institutional investor outflows from equities, adding pressure on the currency, analysts said.  

 

Attention now turns to the US Federal Reserve’s September 17 policy decision, with expectations of a rate cut creating uncertainty over the dollar's trajectory, according to Bhansali. "In the near term, the USD/INR trend remains bullish, with exporters expected to delay sales and importers advised to buy on dips."

 

The Fed is scheduled to hold its next FOMC meeting on Sept. 16-17, with the Bank of Canada, the Bank of England, and the Bank of Japan also set to announce policy decisions this week.

 

The wholesale price index, unemployment rate, and trade data for August will be released today. Additionally, India’s consumer price index (CPI), recorded a slight uptick in August to 2.07 per cent from an eight-year low of 1.61 per cent in July. 

 

Despite the recent pressure, analysts at YES Securities see limited downside in the domestic currency from current levels. "Indian rupee's slide past the 88-mark largely reflects US tariff-driven sentiment rather than a deterioration in India’s underlying fundamentals, suggesting limited room for further depreciation," the brokerage said in a recent report. 

 

The dollar index traded slightly higher amid increased expectations of a Fed rate cut this week after the consumer inflation print and weak labour market. The dollar index, a measure of the greenback against a basket of six major currencies, was up 0.06 per cent at 97.60. 

 

In commodities, crude oil prices traded higher amid escalating supply risks emanating from recent drone attacks on Russian refineries by Ukraine. Brent crude price was up 0.61 per cent at 67.40 per barrel, while WTI crude prices were higher by 0.67 per cent at 63.11 per barrel, as of 9:10 AM IST.