Rupee falls 12 paise to all-time low of 85.06 against US dollar in early trade

Follow The Hindu’s update on the rupee trading against dollar at the forex markets

The rupee dropped 12 paise to an all-time low of 85.06 against the US dollar in early trade on Thursday (December 19, 2024), as a hawkish tilt from the US Federal Reserve sparked a broad dollar rally.

Forex traders said the US Federal Reserve has adjusted its projections for 2025, signalling a more cautious monetary policy stance, pressuring emerging market currencies, including the Indian rupee.

At the interbank foreign exchange, the rupee opened on a weak note and breached the crucial 85.00 level against the greenback.

It fell further to an all-time low of 85.06 against the American currency, registering a fall of 12 paise over its previous close, as dollar demand from importers, foreign fund outflows and a muted trend in domestic equities further dented investor sentiments.

On Wednesday (December 18, 2024) the rupee dropped 3 paise to close at an all-time low of 84.94 against the US dollar.

The rupee was under severe pressure as the US dollar charged ahead on hawkish FED outlook and flirted with a two-year peak at 108.04, while US 10-year bond yield rose to 4.51 per cent, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.

The US FED cut rates by 25 basis points but was very hawkish in its approach as it said that it might take another year or two to get to 2 per cent on inflation. It expects cuts of 50 bps in 2025 and another 50 bps in 2026.