Rupee falls 14 paise to close at all-time low of 85.08 against U.S. dollar

Indian rupee hits record low of 85.08 against USD as Fed signals cautious monetary policy, impacting emerging market currencies.

The rupee dropped 14 paise and breached the crucial 85 level to close at an all-time low of 85.08 (provisional) against the U.S. dollar on Thursday, as a hawkish stance from the U.S. Federal Reserve sparked a broad dollar rally.

Forex traders said the Indian rupee breached the 85-mark for the first time and fell to a new record low on Thursday, as the U.S. Federal Reserve adjusted its projections for 2025, signalling a more cautious monetary policy stance, pressuring emerging market currencies, including the Indian rupee.

The U.S. Federal Reserve cut interest rates by 25-bps to 4.5%, in line with estimates. However, it signalled only two rate cuts in 2025 from its previous expectations of four rate cuts.

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 85.08 against the American currency, registering a fall of 14 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, the rupee dropped 3 paise to close at an all-time low of 84.94 against the U.S. dollar.

"We expect the rupee to trade with a negative bias on global equities following a hawkish Fed and a strong dollar. Concerns over slowdown in the economy may further weigh on the rupee," said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.