The rupee has seen a smart turnaround after it hit an all time closing low of 88.4425 on September 11
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The rupee posted its biggest single day gain in almost a month on Wednesday, buoyed by expectations that the US Fed will re-start its rate cut cycle and positive sentiment around ongoing trade tariff negotiations between India and the US.
The currency (INR) closed about 24 paise stronger at 87.8150 per US Dollar (USD) against previous close of 88.05. Intraday, it touched a high of 87.71 per USD.
The rupee has seen a smart turnaround after it hit an all time closing low of 88.4425 on September 11. In the last four trading sessions, INR has cumulatively appreciated about 63 paise. The expectation in the financial markets is that the US Fed may go for at least a 25 basis points rate cut amid August jobs data showing a slowdown even as inflation has risen a shade. A rate cut could weaken the dollar, strengthening other currencies.
Amit Pabari, MD, CR Forex Advisors, observed that the rupee has gained ground as the US dollar has weakened on expectations of a rate cut by the US Fed. Further, the Chinese yuan has also strengthened against the greenback.
“Dollar’s weakness against other currencies and the expectation that there will be a positive outcome from the ongoing India-US trade tariff negotiations is having a salubrious effect on the Rupee,” he said.
Dipti Chitale, CEO, Mecklai Financial Services, said: “Today rupee opened stronger at 87.83 levels and during the day strengthened to around 87.71 levels. Sharp drop in DXY (Dollar Index) and US treasury yields have contributed to the strength in rupee.”
US job market
She noted that the US Fed has always been sensitive towards the job market, and signs of weakness in US labour market, with unemployment rate edging higher at 4.3 per cent, have actually pushed the chances of three rate cuts by year end. Market players are also expecting 5 rate cuts in next 12 months.
“If this trajectory continues then we can expect DXY to remain weak. Expectation of some positive outcome on India-US trade talk could also provide some support to Rupee,” Chitale said.
Madan Sabnavis, Chief Economist, Bank of Baroda, said the rupee has appreciated substantially in the last two days as the opening up of dialogue between US and India has given confidence to the market.
Further, the dollar has been weakening and probably will go down further once the Fed announces a rate cut later today, he added.
Published on September 17, 2025
