Rupee recovers from all-time low, gains 10 paise to 85.03 against U.S. dollar
The Hindu
Rupee recovers slightly against U.S. dollar, but expected to remain weak due to dollar demand and Fed rate cuts.
The rupee saw some recovery from its all-time low level and appreciated 10 paise to close at 85.03 (provisional) against the U.S. dollar on Friday (December 20, 2024), on softening of the U.S. dollar index and a potential intervention by the Reserve Bank of India (RBI).
Forex traders said the rupee is likely to remain in a weakening mode due to significant dollar demand. The Dollar Index (DXY) is expected to remain elevated, with resistance near the 110 level in the near-term amid a reduced likelihood of significant Fed rate cuts in 2025.
The Federal Reserve cut rates by 25 basis points on Wednesday (December 18, 2024), but its forward guidance for 2025 has softened, with expectations reduced from four rate cuts to just two.
At the interbank foreign exchange, the rupee opened at 85.07 against the greenback. During the day it witnessed an intraday high of 84.95 and a low of 85.12 before ending the session at 85.03 (provisional) against dollar, higher by 10 paise over its previous close.
On Thursday (December 19, 2024), the rupee depreciated 19 paise and breached the crucial 85 level to close at a fresh all-time low of 85.13 against the U.S. dollar.
Traders said the rupee recovered from lower levels in the latter half of the day on the softening of the U.S. dollar index and a potential intervention by the Reserve Bank of India (RBI). A decline in crude oil prices also supported the rupee at lower levels.
“We expect the rupee to trade with a negative bias on weak domestic markets and overall strength in the U.S. dollar amid a hawkish Fed and improved U.S. economy,” Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan, said.
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