Rupee Closes At Five-Month Low Against Dollar Ahead Of Fed Decision

The Indian rupee closed at its lowest level in over five months on Wednesday, ending the session at Rs 87.43 against the US dollar, down 61 paise from Rs 86.82 a day ago.

This marks the weakest closing level for the currency since Feb. 28, reflecting persistent pressure from global risk-off sentiment and foreign fund outflows.

"Market participants remain cautious ahead of the US Federal Reserve’s policy announcement tonight, with additional key US data lined up this week likely to keep volatility elevated," said Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities.

He further added that the local currency will trade within a broader range of 87-87.70.

"Rupee move is surprising to traders. The Dollar index weakening and other Asian currencies relatively stable. The importers did not expect 87 mark to be breached and are sitting out of the market because of sudden pressure on rupee," traders told NDTV Profit.

Trade deal uncertainties are leading to FPI outflows and stop losses were breached last night in the overnight currency market, they said. Traders watching for positive news on trade deal.

US President Donald Trump said on Tuesday that the rate of tariff to be levied against Indian imports had not been finalised yet.

The country may pay tariffs in the range of 20% to 25%, Trump told reporters aboard Air Force One. This was in response to a Reuters report on US tariffs amid extended US trade talks with India.

The report, however, said that this would be a temporary measure considering the trade talks between both the countries. The report also added that a deal will soon be worked out.

According to the report, India and the US are likely to finalise a comprehensive bilateral agreement by September or October.