Rupee falls to all-time low of 85.12 against US dollar over hawkish Fed outlook

New Delhi: The Indian rupee fell 18 paise to all-time low of 85.12 against the US dollar on the National Stock Exchange (NSE) over Federal Reserve’s hawkish commentary on rate cut outlook.

The U.S. Fed meeting which was held on Wednesday, shifted its focus towards maximum employment and price stability, the FOMC halved the number of rate cuts expected for 2025.

After the US Fed’s decision, there was a strong rally in the dollar and the dollar index crossed the 108 level. Apart from the Indian currency, its effect was also seen in other foreign currencies.

The Indian currency opened on a weak note at Rs 85.06 against the dollar. Investors’ sentiment was affected by the soft trend of domestic stock markets, demand for dollars from importers, and foreign capital withdrawal.

The Indian rupee closed at a record low of 84.94 against the US currency on the previous trading day.

“The dollar index rising above 108 and the 10-year bond yield spiking to 4.52 per cent are negatives from the perspective of FII fund flows. But this is likely to be only temporary,” said experts.

After the US Fed’s decision, the Dow Jones declined 2.58 per cent and closed at 42,326.87. The S&P 500 dropped 2.95 per cent to 5,872.20 and the Nasdaq declined 3.56 per cent to close at 19,392.69.

Foreign institutional investors (FIIs) sold equities worth Rs 1,316.81 crore in India on December18, while domestic institutional investors bought equities worth Rs 4,084.08 crore on the same day.

The Indian stock market opened with a decline on Thursday. At around 01:14 pm, the Sensex was trading at 79,300.6 after dropping 881.51 points or 1.10 per cent, while the Nifty was trading at 23,966.15 after dropping 232.70 points or 0.96 per cent.

–IANS