The rupee breached the 96-per-dollar mark for the first time in over two months on Thursday, pressured by a US Federal Reserve rate hike and crude near $105 a barrel, extending a seven-session losing streak.
The Day's Move
- Opened at 95.88, weakened to trade at 96.10
- Depreciated 19 paise from Wednesday's close of 95.91
- Seventh consecutive losing session
- Lost 148 paise (over 1.4%) over the past six sessions, from a close of 94.43 on September 4
The Trigger
The Fed raised interest rates by 25 basis points on Wednesday, its first hike since 2023, with officials signalling one more increase this year. The US dollar index (measuring the dollar against six major currencies) pushed above 100 for the first time in over a month, last trading at 100.07, up 0.10%.
Why It Matters for India
- Rajesh Palviya, Axis Direct: the hike signals renewed tightening even as US inflation stays elevated; for India, higher US yields + a stronger dollar + crude above $100/barrel is "a challenging mix" likely to keep the rupee under pressure, bond yields elevated, and FPI flows volatile
- Aamir Makda, Choice Broking: expects continued rupee volatility given elevated crude and broad dollar strength
A Possible RBI Response
A Reuters report, citing three unnamed traders, said the RBI is likely to intervene in the forex market. RBI itself has not issued a public statement confirming this.
Also Read: Tata Stocks Surge as RBI Ruling Forces Sons Listing
The Bigger Picture
A weaker rupee raises import costs especially oil, India's largest import bill item, and can add to inflationary pressure, while modestly benefiting dollar-earning IT and pharma exporters. Near-term direction likely hinges on whether the Fed's "one more hike" guidance solidifies, and how aggressively RBI defends the 96 level.
