MUMBAI: The rupee managed to reverse the early losses in the day to end marginally higher on Friday, even as the dollar continued to rise. The local unit closed the day 3 pasie higher at 88.10, after opening weaker at 88.20. So far this year, the rupee has depreciated 2.91%, making it the worst performer among Asian peers.
The rupee had plunged to record low of 88.47 on September 11.The gain of the rupee is commendable as the broader equity market bled through the day closing sharply lower at 50 bps down from the previous close, snapping three days of rally.
The rupee traded range-bound through the session in the 88.02-88.28 as the market absorbed the impact of the US Fed’s policy decision and American jobs data.
With these key events behind, focus now shifts to the outcome of the ongoing India-US trade discussions, which will be the next major trigger for rupee movement, said Jateen Trivedi, commodity and currency analyst at LKP Securities.
US Fed chairman Jerome Powell cut the interest rates by 25 bps and pencilled in two more reductions this year. Powell said the labour market was showing growing signs of weakness, stating that revised job numbers mean it is no longer "very solid".
Going ahead, the Fed dot-plot indicates two more rate cuts through the rest of 2025, one cut each in 2026 and 2027, and no cuts in 2028.The dollar index, a measure of the greenback against a basket of six major currencies, was up 0.23% at 97.57.The Fed’s signal of only one rate cut in 2026 drove the rebound, though concerns over a slowing labour market and higher US inflation from Trump’s tariffs may cap dollar gains, according to Anil Kumar Bhansali of Finrex Treasury Advisors.
On the trade front, chief economic advisor V Anantha Nageswaran had on Thursday expressed confidence that the tariff discussions would conclude within the next couple of months. He also said he sees the reciprocal tariffs coming down to 10-15%.