Indian rupee opens 4 paise up at 88.40 against dollar

Indian Rupee

The rupee opened 4 paise up on September 12  after a key US inflation data came in line with expectations, adding to hope of a rate cut by the Federal Reserve, currency experts said.

The currency opened at 88.40 against the dollar. The rupee had ended the previous session at 88.44, narrowing some of the day’s losses after sinking to a new low of 88.4563.

"The weak-dollar theme, coupled with hopes that US-India trade talks may make progress, could provide some breathing room for the rupee in the coming days. But for now, tariffs remain the overhang that markets cannot ignore," said Amit Pabari, managing director at CR Forex Advisors.

Underlying US inflation rose as expected in August, keeping the Federal Reserve on track to cut interest rates next week.

The core consumer price index, excluding the often volatile food and energy categories, increased 0.3 percent from July, according to Bureau of Labor Statistics data out on September 11. When incorporating those components, the overall CPI rose 0.4 percent, the most since the start of the year.

The rupee had plunged to new low on strong dollar demand from oil and gold importers for hedging purpose, tariff-related uncertainty, and consistent selling by foreign investors in Indian equites.

There were no signs of intervention by the Reserve Bank of India (RBI) in the spot market when rupee touched record low as it allowed the domestic currency to trade with market flows.

The absence of RBI comes at a sensitive time when the rupee is under heavy pressure due to US tariffs on Indian exports, which continue to weigh on sentiment and add to concerns about the country’s external position.

Apart from tariffs, consistent outflows by foreign portfolio investors (FPI) in equities is also fuelling the depreciation of currency. According to NSDL data, FPIs remained net seller of Rs 17,741 crore in July, Rs 34,993 crore in August, and Rs 7,368 crore so far in September.

With agency inputs