Currency Market News: Rupee weakens by 15 paise to 85.34 vs US dollar

Rupee dropped 15 paise to 85.34 against the US dollar in early trading on Wednesday, following a recovery in the greenback. This shift was driven by a softened stance from President Donald Trump, particularly in his views on the Federal Reserve and China.

Forex traders noted that Trump's recent comments supported the US dollar. On Tuesday, he backed away from his threats to dismiss Federal Reserve Chair Jerome Powell after days of criticism regarding the Fed's stance on interest rates. Additionally, Trump hinted at the possibility of lowering tariffs on China, further supporting the dollar.

As a result, the dollar index rose to 99.28, while the US 10-year bond yield slightly eased to 4.34 per cent. US stock indices gained over 2.5 per cent in response to Trump's change in rhetoric.

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In early trade on the interbank foreign exchange market, the rupee opened at 85.24 but weakened to 85.34, reflecting a 15 paise loss from its previous close. On Tuesday, the rupee had settled 4 paise lower at 85.19.

The dollar index, which measures the greenback’s strength against a basket of six currencies, increased by 0.37 per cent to 99.28. According to Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors, the rise came after Trump signaled that he would not fire Powell but hoped for more proactive actions on interest rate cuts.

In commodity markets, Brent crude oil rose 0.83% to USD 68 per barrel, bolstered by concerns over new sanctions on Iran and a drop in US crude stocks. Trump's more moderate stance on the Fed also contributed to market optimism.

With the dollar showing strength and domestic demand intact, experts predict that the USD/INR pair will trade within the range of 85.00 to 85.40.

Stock market summary

Indian equities opened higher on Wednesday, driven by positive cues from Asian markets and continued Foreign Institutional Investor (FII) buying. The Sensex crossed the 80,000 mark, while the Nifty50 index traded at 24,142.09. Broader markets followed suit, with gains of up to 0.8 per cent in line with the main indices.