Indian rupee opens 15 paise lower as dollar index surges

On Friday, the Indian rupee appreciated sharply by 20 bps largely due to the Bank of Japan’s 25-basis-point rate hike.

The Indian rupee opened 15 paise lower on January 27 due to the dollar index surging as US Federal Reserve policy is in focus. The local currency opened 15 paise lower at 86.3550 against the US dollar, as against 86.2050 against the greenback at the previous close.

The Dollar index, which tracks American currency's value against six major currencies rose to 107.682 in early trade, as against 107.443 in the previous trading session.

The US Federal Reserve's policymakers will meet later this week to decide on the interest rates. However, experts said that rather than interest rate decisions, projections on the future rate path will be more important to guide the market.

The Fed cut the benchmark rate a full percentage point last year.

Amit Pabari, managing director at CR Forex Advisors said as markets brace for a pivotal week ahead, all eyes are on the upcoming central bank meetings.

The US Federal Reserve is expected to maintain its policy rate at 4.25-4.50%. While inflationary pressures show signs of easing, concerns over a stagnating labour market and fiscal uncertainties could temper any hawkish inclinations, Pabari added.

On Friday, the Indian rupee appreciated sharply by 20 bps largely due to the Bank of Japan’s 25-basis-point rate hike. The rising rates and an appreciating yen triggered an unwinding of the carry trades, creating downward pressure on the dollar index and supporting the rupee's gains.