The Indian rupee today closed at 89.96, slipping by nearly 9 paise against the US dollar. The currency, which had opened at a low of 90.03, saw a light recovery by afternoon (1:00 pm IST) at 89.88 and lifted up a bit, closing at 89.87 against the US dollar.
However, today’s close was a tad bit weaker than yesterday’s close of 89.87. As per a Reuters report, throughout the day the currency traded in the range of 89.77–90.08. Markets now await the much-anticipated rate cut by the US Federal Reserve, which is likely to drive the trajectory of the local currency.
Rupee watching out for Fed’s decision
Commenting on the currency movement, Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said, “The rupee slipped 6 paise to 89.92 as the dollar index stayed flat near 99, and the RBI policy offered no direct support due to the absence of visible intervention. Market focus now shifts to the Fed’s policy decision tonight, the last of 2025, which could set the next directional cue. The rupee is expected to trade in the 89.75–90.25 range.”
The market now remains cautious about the Fed’s policy decision. It is expected that Fed Chair Jerome Powell will announce a quarter-point rate cut at the US Federal Reserve meeting. Further, additional easing of monetary policy is likely on the cards on the back of a cooling labour market, weak hiring, and rising layoffs in the US economy.
“How forcefully (Fed Chair) Powell communicates a message of pause is likely most important for the dollar, but steps to add liquidity to the markets could also play a role in FX reaction,” Reuters quoted MUFG as saying in a note.
Talks with US to provide support to the rupee
Additionally, the Indian currency is also likely to see some positive movement in the backdrop of the ongoing bilateral trade discussions with the US delegation currently in India. “Talks are continuously progressing with them. We are moving forward towards a bilateral trade agreement,” Commerce and Industry Minister Piyush Goyal said on Wednesday. A final outcome on the much-stalled trade deal between India and the US is expected to provide some relief to the local currency.