The Indian rupee fell to a two-week low, closing at 88.6950 against the U.S. dollar with a 0.6% decline. The currency touched 88.7375 during the session as outflows intensified following Federal Reserve Chair Jerome Powell's hawkish policy signals. Powell indicated that October's rate cut may be the last for 2025, causing the dollar and U.S. Treasury yields to rise.

Rupee's Performance

The Indian currency opened weaker at 88.41 against the US dollar, marking a significant decline from its previous close. Here's a breakdown of the rupee's movement:

Factors Influencing the Rupee

Several factors contributed to the rupee's weakness:

1. Fed Chair's Comments: Jerome Powell's remarks suggesting that a December rate cut is not assured strengthened the US dollar.

2. US Treasury Yields:

   • 10-year yield: Rose by 8 basis points
   • 2-year yield: Increased to 3.60% after rising 9 basis points

3. Dollar Index: Remained steady after jumping 0.4% previously, regaining the 99 mark

4. Rate Cut Probability: Money markets are pricing a 68% chance of a 25 basis point rate cut in December.

Market Dynamics

The rupee faced additional pressure from:

• Firm US yields
• Persistent dollar demand from importers

India's central bank reportedly intervened through state-run banks to limit losses, though the intervention was not aggressive. Stop losses were triggered in the 88.40-88.50 zone, pushing USD/INR to fresh highs.

Regional Currency Performance

Asian currencies broadly declined 0.1% to 0.5%, reflecting the impact of the Fed's stance on emerging markets.

International Developments

President Trump announced plans to lower U.S. tariffs on China to 47% from 57% following a meeting with President Xi Jinping in South Korea. This development could potentially impact global trade dynamics and currency markets.

Implications for Investors

The rupee's depreciation may have several implications:

• Potentially higher import costs for businesses
• Possible boost for export-oriented sectors
• Increased volatility in the forex market

Investors and businesses engaged in international trade may need to reassess their currency hedging strategies in light of these developments.

As global economic conditions remain fluid, market participants should stay alert to further comments from central banks and key economic indicators that could influence currency movements in the near term.

The Indian rupee strengthened against the US dollar on Wednesday, recovering from its previous day's decline. The currency's appreciation was driven by strong domestic markets and optimism surrounding a potential India-US trade deal.

Rupee Performance

The domestic currency closed at 88.21 against the US dollar, gaining 8 paise from its previous close of 88.29. During the trading session, the rupee fluctuated between 88.15 and 88.35.

Factors Influencing Rupee Movement

1. Trade Deal Optimism: US President Donald Trump's statement about working on a trade deal with India boosted market sentiment.
2. Strong Domestic Markets: The robust performance of Indian equity markets supported the rupee.
3. Weak Crude Oil Prices: Lower oil prices typically benefit the rupee, as India is a major oil importer.

Market Indicators

Foreign Institutional Investors (FIIs) showed confidence in the Indian market, purchasing equities worth Rs 10,339.80 crore on Tuesday.

Economic Data

India's industrial production growth remained steady at 4.00% in September, with factory output expanding by 3.20%.

Market analysts expect the rupee to maintain a slight positive bias, supported by positive domestic markets and weak crude oil prices. However, month-end dollar demand from importers may limit sharp gains in the near term.