Indian rupee struggles amidst Fed rate expectations

The Indian rupee struggled to gain momentum on Tuesday, following a brief rally driven by the weakening US dollar ahead of the Federal Reserve’s highly anticipated interest rate cut decision.

At 10:28 AM IST, the rupee was trading at 83.84 against the US dollar, slightly lower than the previous session’s closing of 83.8875. Currency traders reported bids from two large public sector banks, but it remained unclear whether they were acting on behalf of the Reserve Bank of India or their clients.

Asian currencies were generally trading higher, while the dollar index remained flat at 100.70, having declined in the past three sessions.

Srinivas Puni, managing director at forex advisory firm QuantArt Market Solutions, noted that the US dollar was continuing to face pressure amid growing expectations of a Federal Reserve rate cut.

The market is anticipating a 50-basis point reduction, and there is a risk of disappointment if the Fed opts for a smaller cut or issues a less aggressive statement.

Attribution: Reuters

Subediting: M. S. Salama