The Indian rupee is likely to weaken, influenced by the U.S. dollar’s ongoing climb and rising U.S. Treasury yields following the mixed signals from the latest Federal Reserve decision. Market watchers expect the rupee to begin trading in the ₹88.20–88.22 range against the dollar, compared with ₹88.1275 in the previous session.
After a short-lived uptick, the rupee was unable to break through the 88 per dollar barrier, reflecting fragile investor confidence and sensitivity to external forces. Despite some optimistic signs earlier this week, momentum quickly turned against it.
On the positive side, there is speculation that Indian government bonds might be included in the Bloomberg Global Aggregate Index, which could boost demand. Meanwhile, the dollar index has edged higher in Asia, approaching 97.50, amid gains in U.S. Treasury yields. These gains follow a modest rate cut by the Fed and forward guidance that seemed less dovish than many market participants had hoped.
Another factor adding pressure was stronger U.S. labor market data: new jobless claims dropped last week, countering the previous week’s increase, which supported Treasury yields and, by extension, the dollar.
