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The rupee dropped 12 paise to an all-time low of 85.06 against the US dollar in early trade on Thursday (December 19, 2024), as a hawkish tilt from the US Federal Reserve sparked a broad dollar rally.

Forex traders said the US Federal Reserve has adjusted its projections for 2025, signalling a more cautious monetary policy stance, pressuring emerging market currencies, including the Indian rupee.

At the interbank foreign exchange, the rupee opened on a weak note and breached the crucial 85.00 level against the greenback.

It fell further to an all-time low of 85.06 against the American currency, registering a fall of 12 paise over its previous close, as dollar demand from importers, foreign fund outflows and a muted trend in domestic equities further dented investor sentiments.

On Wednesday (December 18, 2024) the rupee dropped 3 paise to close at an all-time low of 84.94 against the US dollar.

Rupee under ‘severe’ pressure

The rupee was under severe pressure as the US dollar charged ahead on hawkish FED outlook and flirted with a two-year peak at 108.04, while US 10-year bond yield rose to 4.51 per cent, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

The US FED cut rates by 25 basis points but was very hawkish in its approach as it said that it might take another year or two to get to 2 per cent on inflation. It expects cuts of 50 bps in 2025 and another 50 bps in 2026.

“A broad sell-off in equities, commodities, and bonds has kept the dollar well bid. We expect a slow and steady depreciation as the Reserve Bank of India (RBI) may protect key levels though may not change the direction,” Bhansali added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.01 per cent at 108.03.

Brent crude, the global oil benchmark, fell 0.42 per cent to USD 73.08 per barrel in futures trade, on a surging dollar and a hawkish FED after it signalled slower easing.

The Indian rupee appreciated 7 paise to 83.90 against the US dollar in early trade on Wednesday (August 14, 2024), as the American currency retreated from its elevated levels.

Forex traders said the US dollar has weakened against majors post the US Producer Price Index (PPI) print, which came in softer than anticipated, leaving the Dollar Index vulnerable to further correction.

At the interbank foreign exchange, the rupee opened at 83.90 against the greenback, registering a gain of 7 paise over its previous close.

On August 13, 2024, the rupee settled for the day on a flat note at 83.97 against the US dollar.

The Reserve Bank of India has been holding the 84.00 psychological mark, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

“The rupee is expected to open around 83.91 slightly stronger with a narrow range of 83.87/83.97, as the market awaits the Indian trade data for July-24,” Bhansali added.

Forex traders said market participants are also awaiting cues from the CPI data from the US scheduled to be released later in the day.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading marginally higher by 0.10 per cent at 102.66.

Brent crude, the global oil benchmark, advanced 0.57 per cent to USD 81.15 per barrel.

The rupee depreciated 5 paise to 83.53 against the US dollar in early trade on Wednesday, July 3, 2024, weighed down by the strong American currency and elevated crude oil prices.

Forex traders said the rupee is trading in a narrow range as US dollar buying by oil companies and Foreign Portfolio Investors (FPIs) further dented investor sentiment, while a firm trend in domestic equities supported the rupee at lower levels.

At the interbank foreign exchange market, the rupee opened at 83.51 and lost further ground to trade at 83.53 against the greenback in initial deals, registering a fall of 5 paise from its previous closing level.

On Tuesday, the rupee depreciated 4 paise to settle at 83.48 against the US dollar.

“… Global factors such as the elevated US DXY around 105.50, the depreciation of the Yen and Yuan, and the rise in US bond yields have prevented the rupee from gaining significant strength and moving away from its multi-month low,” CR Forex Advisors MD Amit Pabari said.

Rupee traders are in for a roller-coaster ride, though within a constrained range of 83.20 to 83.70 for the time being, Pabari added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 105.71, lower by 0.01 per cent, following a surge in US treasury yields.

Brent crude futures, the global oil benchmark, advanced 0.55 per cent to USD 86.71 per barrel.

In the domestic equity market, Sensex hit the historic 80,000-mark and Nifty scaled fresh lifetime highs in early trade. The BSE Sensex was later trading 446.5 points, or 0.56 per cent higher at 79,887.95 points. The broader NSE Nifty advanced 132.50 points, or 0.55 per cent, to 24,256.35 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets on Tuesday, as they offloaded shares worth ₹2,000.12 crore, according to exchange data.

The rupee fell 4 paise to 83.48 against the US dollar on Thursday, June 20, 2024, due to firm American currency and an upward trend in crude oil prices overseas.

The local unit resisted the fall amid the unabated inflow of foreign capital but gave in to the pressure due to a muted trend in the domestic equity markets, forex traders said.

At the interbank foreign exchange market, the local unit opened at 83.43 and lost further to 83.48 against the greenback, registering a fall of 4 paise from its previous close.

On Wednesday, the rupee settled 1 paisa lower at 83.44 against the US dollar. “The local currency’s upward momentum was halted by a strong US dollar and rising crude oil prices in the international market,” said Anand James, Chief Market Strategist, Geojit Financial Services.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.02 per cent at 104.90.

Brent crude futures, the global oil benchmark, advanced 0.02 per cent to USD 85.09 per barrel.

In the domestic equity markets, the 30-share BSE Sensex fell 72.43 points, or 0.09 per cent, to 77,265.16 points. The broader NSE Nifty declined 30.25 points, or 0.13 per cent, to 23,485.75 points.

Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, as they purchased shares worth ₹7,908.36 crore, according to exchange data.