Overview
- The rupee crossed the 96-per-dollar mark on Thursday after the US Federal Reserve raised its policy rate by 25 basis points, trading as weak as about 96.10 before later recovering toward the mid-95s.
- Analysts and traders said a stronger dollar from the Fed move pushed up demand for dollars by oil importers because Brent crude stayed elevated, which widened pressure on India’s trade balance and inflation outlook.
- Net foreign institutional investor sales added selling pressure on the currency and local markets, with exchange data showing multi-thousand-crore outflows in mid-September.
- The Reserve Bank of India’s large forex reserves, which recently hit a record level, and suspected market intervention were credited by traders with limiting intraday losses and preventing a deeper slide.
- Watch points for markets are further Fed signals on rates, crude price moves and whether the RBI takes more visible FX action, all of which could affect the rupee’s path and domestic inflation in the weeks ahead.