- Indian Rupee (INR) is falling for a second day
- Optimism surrounding US trade talks lifts sentiment
- US Dollar (USD) is rising versus major peers
- The Fed cut rates by 25 bps and signaled further cuts
The US dollar-to-Indian rupee (USD/INR) exchange rate is rising, snapping a three-day losing run. The pair fell 0.16% in the previous session, settling on Wednesday at 87.74. At 21:30 UTC, USD/INR trades 0.54% at 88.01 and trades in a range of 87.98 to 88.16.
The Indian Rupee weakened alongside its regional peers on Thursday as investors digested the US Fed rate decision, despite optimism surrounding US trade tariffs with India.
India’s chief economist said that the US could soon scrap the additional 25% penal tariff and lower the reciprocal tariffs to 10% to 15% from the current 25% level.
Following the announcement, domestic equities jumped higher. The Sensex and Nifty 50 ended up nearly 0.4% each. The yield on the 10-year bond rose to 6.51%, up four basis points.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.51% at 97.37, extending gains from yesterday.
The US dollar is rebounding higher, reversing from an almost four-year low yesterday, after the Federal Reserve cut interest rates by 25 basis points in line with expectations and signalled intentions to cut rates in the October and December meetings. There was only one dissent, Stephen Miran, who voted for a larger 50 basis point rate cut.
The Fed cut rates to support the labour market, which has weakened in recent months. Meanwhile, inflation remains above target at 2.9% as Trump’s tariffs add inflationary pressures.
Still, US jobless claims today helped to calm some concerns surrounding the US job market. Initial jobless claims fell by the most in almost four years, reversing a significant jump in the prior week. Initial claims fell by 33,000 to 231,000 in the week ending September 13th.
