7 hours ago
The Indian rupee depreciated 32 paise to 85.64 against the US dollar in early trade on Thursday (May 15), weighed down by weak domestic equities and sustained dollar demand.
The local unit opened at 85.53 and quickly slipped to 85.64 at the interbank foreign exchange market.
This marks a reversal from Wednesday’s (May 14's) close of 85.32, when the rupee had gained marginally by 4 paise.
Equity markets extended their decline.
The BSE Sensex fell 230.76 points to 81,099.80, while the NSE Nifty dropped 54.95 points to 24,611.95.
Forex traders said investors are cautious ahead of US Federal Reserve Chair Jerome Powell’s speech later in the day.
His comments could offer clues on the future path of interest rate cuts.
“The rupee’s direction now hinges on Powell’s tone. If the Fed turns more hawkish due to sticky inflation or tariff risks, the rupee may face further pressure,” a currency trader with a Mumbai-based bank said.
On Wednesday (May 14), India’s wholesale inflation cooled to a 13-month low of 0.85% in April, raising expectations of a possible rate cut by the Reserve Bank of India in June.
While rate cuts can support economic growth, they often weigh on the rupee due to reduced interest rate differentials and liquidity expansion.
“The soft WPI print boosts hopes of policy easing, but short-term rupee weakness cannot be ruled out,” said Amit Pabari, MD, CR Forex Advisors.
Meanwhile, Asian currencies weakened and US Treasury yields rose. The 10-year US yield climbed to 4.55%, its highest in a month, amid fears that new US tariffs could stoke inflation, complicating the Fed’s rate-cutting plans.
Foreign investors bought ₹931.80 crore worth of Indian equities on Wednesday, data from exchanges showed.
Outlook
With Fed commentary, global yields, and domestic inflation dynamics in play, the rupee may remain volatile in the near term, experts say.
Traders will watch Powell’s remarks closely for fresh cues.
-With inputs from PTI and Reuters
