Rupee opens 16 paise down at 87.97 as dollar index surges

Indian rupee

The rupee opened 16 paise down on September 18 following its Asian peers as the dollar index surged on mixed signals from the US Federal Reserve.

The rupee opened at 87.96 against the dollar after ending the previous session at 87.80.

The dollar index, which measures the greenback's against a basket of six major currencies, rose to 97.009 in the early trade from 96.873.

"The rupee is expected to open slightly lower from its yesterday’s closing as traders assess Fed outlook following rate cut. Expect a range bound movement in the pair today after the passing over of a major event while we await for the outcome of US-India trade tariffs meeting," said Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.

The Federal Reserve on September 17 cut its benchmark interest rate by 25 basis points to a range of 4.00-4.25 percent, as was expected. This is the US central bank’s first reduction since December 2024 and the first of President Donald Trump’s second term.

The Federal Open Market Committee voted 11–1 in favour of the rate cut, with newly appointed governor Stephen Miran dissenting in support of a deeper half-point cut. Governors Michelle Bowman and Christopher Waller, who had pushed for easing in July, backed the quarter-point reduction this time.

“Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated,” the Fed said. It added that “downside risks to employment have risen,” prompting the shift in policy.

According to Reuters, the Fed's dot plot signalled dovishness, while parts of chair Jerome Powell’s remarks were read as hawkish by some analysts. While the Fed delivered a 25 bps cut, the dot plot projected two more reductions this year.

(With agency inputs )