Rupee Falls 12 Paise To All-Time Low Of 85.06 Against US Dollar In Early Trade

Mumbai: The rupee dropped twelve (12) paise to an all-time low of 85.06 against the US dollar in early trade on Thursday, 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.

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The rupee opened with muted momentum and breached the crucial 85.00 level against the greenback at the interbank foreign exchange. 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.

Rupee Hits Record Low as Hawkish Fed Outlook and FII Sell-Off Weigh on Markets

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

Rupee hits all-time low of 85.06 against USD in early trade, falling 12 paise on hawkish Fed outlook.

The US FED cut rates by 25 basis points but was very hawkish in its approach as it said 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," Anil Kumar 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. The global oil benchmark Brent crude 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. 

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In the domestic equity market, the 30-share BSE Sensex was trading 910.95 points or 1.144 per cent down at 79,271.25 points in morning trade, while Nifty was down 281.15 points or 1.16 per cent to 23,917.70 points. Foreign Institutional Investors (FIIs) offloaded Rs 1,316.81 crore in the capital markets on a net basis on Wednesday, according to exchange data.