Rupee falls four paise to 86.59 against U.S. dollar in early trade

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The rupee depreciated four paise to 86.59 against the U.S. dollar in early trade on Thursday (January 30, 2025), after the US FED kept rates on hold and was hawkish in its outlook.

Forex traders said the rupee continued to face pressure due to sustained foreign fund outflows and broad strength of the American currency in the overseas market.

At the interbank foreign exchange, the rupee opened at 86.58 then fell further to 86.59 against the American currency, registering a decline of four paise over its previous close.

On Wednesday, the rupee pared its initial losses and settled for the day on a positive note, higher by two paise to close at 86.55 against the U.S. dollar.

The US FED kept rates on hold but was hawkish in its outlook as it said rates would be held higher for longer and downplaying expectations for future rate cuts.

“The US Federal Reserve’s decision to hold rates at 4.25%-4.50% has further added to the rupee’s woes. Despite pressure from former President Donald Trump for deeper cuts, Fed Chair Jerome Powell emphasized a data-driven approach, citing stable unemployment and positive inflation trends,” CR Forex Advisors, MD – Amit Pabari said.

Additionally, the focus remains on India’s upcoming budget announcement, which is expected to set the tone for foreign investment and economic growth, traders said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was at 107.84, lower by 0.14%. Brent crude, the global oil benchmark, was quoted 0.08% lower at $76.52 per barrel in futures trade, as traders digested a hawkish FED and US president’s reiteration that he had plans to increase domestic energy production.

In the domestic equity market, the 30-share BSE Sensex was trading 99.33 points or 0.13% up at 76,632.29 in morning trade, while Nifty was higher by 58.50 points or 0.25% to 23,221.60.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,586.43 crore in the capital markets on net basis on Wednesday, according to exchange data.