- Indian Rupee (INR) fell to a record low
- Domestic equities fall 0.6%
- US Dollar (USD) rises against its major peers
- Fed cuts rates but indicates fewer cuts in 2025
The US Dollar Indian Rupee (USD/INR) exchange rate is rising for a third straight day. The pair rose 0.01% in the previous session, settling on Tuesday at 84.90. On Wednesday at 19:30 UTC, USD/INR trades +0.31% at 85.16 and trades in a range of 84.81 to 85.30.
The Indian rupee fell to a record low on Wednesday, pressured by strong importer demand for dollars and likely outflows from local equities. However, intervention by the Reserve Bank of India curbed losses.
The benchmark Indian equity indices, the Sensex and the Nifty 50, both ended lower by 0.6%.
Concerns over India’s growth outlook have also kept the rupee under pressure.
Despite these pressures, the rupee has fared better than its regional peers due to routine interventions by the Reserve Bank of India.
The US Dollar is rising against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, trades +1.16%, trading at 108.20 on Wednesday after gains in the previous session.
The US dollar has surged to a 2024 high after the Federal Reserve cut interest rates but provided hawkish forecasts.
In line with expectations, the Federal Reserve cut rates by 25 basis points to 4.5%, its third straight rate cut in a row. However, official projections for rate cuts in 2025 pointed to fewer rate reductions than originally forecast amid ongoing concerns of sticky inflation.
The Feds’ dot plot pointed to only 225 basis point rate cuts next year, significantly more hawkish than the 75 basis point cuts previously expected.
Bed now expects US inflation to end next year at 2.5%, up from the 2.1% previously forecast, and unemployment is expected to end next year at 4.3%, below the 4.4% previously expected.
As the market reined in rate card expectations for next year, the US dollar rallied to a two-year high.