Rupee opens 8 paise down at 86.55 against dollar as Fed holds rates steady

Indian rupee

The rupee opened 8 paise down on June 19 as the dollar index surged after the US Federal Reserve left interest rates unchanged and crude oil prices continued to gain with no end in sight for the Israel-Iran conflict.

The currency opened at 86.55 against the US dollar after ending the previous session at 86.47.

The dollar index, which measure American currency's value against six major global peers, rose to 99.051 in the early trade. It closed the previous day at 98.905.

The dollar index surge after the Federal Reserve held steady on interest rate at 4.25-to 4.5 percent in the June 18 meeting. The central bank has maintained the same level since December amid geopolitical tensions and tariff volatility.

The Federal Reserve's dot plot indicates two rate cuts later this year. However, the Federal Reserve said it would "carefully assess incoming data, the evolving outlook, and the balance of risks".

"Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low and labour market conditions remain solid. Inflation remains somewhat elevated," the Fed said in a statement.

Brent crude continued to trade higher as traders awaited clarity on whether the US will join Israel in striking Iran. "The ongoing conflict, now in its seventh day, continues to elevate risks. Despite the pullback, crude remains near five-month highs," said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

According to Bloomberg data, Brent crude oil prices were at $$76.42 a barrel.