The rupee fell 12 paise to 85.06 against the US dollar in early trade on Thursday, as a hawkish tilt from the US Federal Reserve triggered a major dollar rally.
Forex dealers say the US Federal Reserve has adjusted its forecast for the year 2025, indicating a more cautious monetary policy stance, putting pressure on emerging market currencies, including the Indian rupee.
In foreign exchange, the rupee opened on a weaker note and breached the key 85.00 level against the greenback. It fell sharply to as low as 85.06 against the US currency, resulting in a fall of 12 paise over its previous close. as the dollar is sought after by importers, foreign fund outflows and muted trends in domestic stocks are further fueling investor sentiment.
On Wednesday, the rupee fell by 3 paise to close at a record low of 84.94 against the US dollar.
The rupee was under heavy pressure as the US dollar edged ahead on the Fed’s outlook and hit a two-year flat at 108.04, while the 10-year US bond yield rose to 4.51 percent, said Anil Kumar Bhansali, Treasury chief. and the Executive Committee. Director Finrex Treasury Advisors LLP.
The US FED cut rates by 25 basis points but was hawkish in its approach as it said it could take another year or two to get to 2 percent in the cash flow. It expects a cut of 50 bps in 2025 and another 50 bps in 2026.
“Broad selling in equities, commodities, and bonds has kept the bid strong. We expect a gradual decline as the Reserve Bank of India (RBI) may protect key levels though may not change direction,” Bhansali added. .
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading up 0.01 percent at 108.03. Brent crude, the global oil benchmark, was down 0.42 percent at $73.08 a barrel in futures trading. a rising dollar and a hawkish FED after it showed some easing.
In the domestic equity market, the 30-share BSE Sensex was trading 910.95 points or 1.144 percent down at 79,271.25 points in morning trade, while the Nifty was down 281.15 points or 1.16 percent at 23,917.70 points.
Foreign Institutional Investors (FIIs) withdrew Rs 1,316.81 crore from capital markets on Wednesday, according to exchange data.