Indian Rupee Hits Record Low of 85.12 Against US Dollar Amid Hawkish Fed Outlook
The Indian rupee fell by 18 paise to reach an all-time low of 85.12 against the US dollar on the National Stock Exchange (NSE) on Thursday. This decline follows the Federal Reserve’s recent hawkish commentary regarding its outlook on rate cuts. During its meeting on Wednesday, the US Federal Reserve shifted its focus towards achieving maximum employment and price stability, halving the number of rate cuts initially anticipated for 2025.
Following the Fed’s decision, the US dollar rallied, with the dollar index surpassing the 108 mark. The effect of this rally was seen not only on the Indian rupee but also on several other foreign currencies.
The Indian currency opened weak at 85.06 against the dollar, with a broader market sentiment dampened by a soft domestic stock market trend, sustained demand for dollars from importers, and foreign capital outflows. The Indian rupee had closed at a record low of 84.94 in the previous trading session.
Experts noted that the rise in the dollar index above 108 and the spike in the 10-year US bond yield to 4.52% were detrimental to foreign institutional investment flows but stressed that these effects may be temporary.
On the US stock market front, the Dow Jones dropped by 2.58%, closing at 42,326.87. Similarly, the S&P 500 and Nasdaq dropped by 2.95% and 3.56%, respectively, as market reactions to the Fed’s stance continued to play out globally.
Meanwhile, the Indian stock market opened lower on Thursday. As of 01:14 pm, the Sensex was down by 881.51 points or 1.10%, trading at 79,300.6, while the Nifty had dropped 232.70 points or 0.96%, trading at 23,966.15.
On the domestic front, foreign institutional investors (FIIs) sold equities worth ₹1,316.81 crore in India on December 18, while domestic institutional investors bought equities worth ₹4,084.08 crore on the same day.
