Rupee Opens Lower At 87.97 Against US Dollar After Fed's Quarter-Point Rate Cut

Following the US Federal Reserve’s decision to cut interest rates, the Indian rupee opened 15 paise weaker at 87.97 against the U.S. dollar on Thursday, compared to its previous close of 87.82 on Wednesday.

US Fed slashed the benchmark lending rates by 25 basis points, and sees two more cuts by 2025-end. The key rates have been re-adjusted to 4–4.25%.

The rupee was expected to open lower as traders assess the FED outlook following the rate cut, said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP

"Expect a range-bound movement in the pair today after the passing over of a major event, while we await the outcome of the US-India trade tariffs meeting. Today’s opening is a tad weaker after a rise in the dollar index and a fall in Asian currencies. Exporters can wait for selling above 88.00 levels for the day," Bhansali further added.

DXY had tumbled to a 43-month low, touching 96.21 levels (last seen in Feb 2022) after the FOMC statement, but then managed to regain composure towards 97.00 levels following Powell’s presser, said Kunal Sodhani, Head - Treasury, Shinhan Bank

He further added that Powell stressed that inflation is “somewhat elevated” and labor demand “softened,” but rules out broad support for a 50 bps move, which acted as a warning that future rate cuts aren't guaranteed, sending the US Dollar back up.

"While the market is treating the additional 2 cuts in 2025 as dovish, overall, I think the message is hawkish. There was a significant dispersion in policy views by this Fed for 2026, which probably means more volatility in financial markets next year," Sodhani said.

For Dollar-Rupee, 87.69 continues to remain as immediate support, followed by 87.53, while 88.20 acts as first resistance, followed by 88.36 levels, Sodhani added.