Rupee gains as Powell opens door for rate cuts; opens higher at 87.39/$

Indian Rupee today: The domestic currency opened 14 paise higher at 87.39 against the dollar on Monday

The Indian Rupee advanced on Monday after the Federal Reserve Chair Jerome Powell signalled a rate cut in the upcoming September meeting. 

 

The domestic currency opened 14 paise higher at 87.39 against the dollar on Monday, according to Bloomberg. The unit has slipped 2.05 per cent in the current financial year and 2.15 per cent in 2025 so far. In August, it rose around 0.27 per cent against the dollar.

 

In the previous session, the rupee continued to weaken, though it opened slightly higher at 87.38 today as US–India trade tensions weigh on sentiment, according to Anil Kumar Bhansali, head of treasury and executive director of Finrex Treasury Advisors LLP. Expectations of a Federal Reserve rate cut offered some reprieve, while the Reserve Bank of India (RBI) is seen actively intervening to curb excessive depreciation, limiting the downside, he added. 

 

Make smarter market moves with The Smart Investor. Daily insights on buzzing stocks and actionable information to guide your investment decisions delivered to your inbox.

Subscribe

 

However, if outflows accelerate following the additional 25 basis points trade tariffs imposed by the Trump administration from August 27, the dollar–rupee pair could move higher, Bhansali said. "Importers are expected to continue buying on dips, while exporters may wait to hedge, selling cash and near-term positions at today’s highs." 

 

Fed Chair Jerome Powell left the door open for rate cuts at the Jackson Hole summit in Wyoming on Friday. Powell hinted at a shifting balance of risks, warning that the policy stance would be adjusted after the weak employment figures. He also emphasised the ongoing risk of higher inflation spurred by President Donald Trump’s tariffs. The FOMO will meet on September 16-17, with traders seeing an 84 per cent chance of a rate cut, as per Bloomberg. 

 

The dollar index, a measure of the greenback against a basket of six major currencies, was up 0.16 per cent at 97.87.

 

In commodities, oil prices rose after Ukraine attacked Russia's Nuclear plant, thus fanning concerns that Russian oil supply could be disrupted. Brent crude price was up 0.09 per cent at 67.79 per barrel, while WTI crude prices were higher by 0.13 per cent at 63.74 per barrel, as of 9:05 AM IST. 

 

Last week, the central government proposed a simplification and reduction of goods and services tax (GST) rates, and this kept the rupee afloat during the week. S&P Global's upgrade of the country's sovereign credit rating from 'BBB-' to 'BBB' also kept sentiment in the forex market high during the week. 

Weekly cues

On the economic front, the US will release its house price index data for June (Monday), Q2 gross domestic product (GDP) data (Thursday), and personal consumption expenditure price index for July (Friday). Back home, India will release its industrial and manufacturing production for July (Thursday) and Q2 GDP (Friday).