The Indian rupee weakened to a fresh all-time low against the US dollar, with USD/INR hitting 88.3675 on Thursday before stabilizing around 88.34, up 0.38% intraday.
The move comes ahead of the crucial US consumer inflation report, which will play a decisive role in shaping the Federal Reserve’s upcoming monetary policy stance.
Fed policy outlook
The Federal Reserve is widely expected to resume its monetary easing cycle next week. According to the CME FedWatch tool, traders currently price in a 92% probability of a 25-basis-point rate cut, bringing the policy rate to 4.00%-4.25%. However, there remains an 8% chance of a deeper 50-basis-point reduction to 3.75%-4.00%, depending on the inflation print.
Why it matters
The dollar’s strength has kept the rupee under pressure in recent sessions, and the Fed’s policy decision on September 17 could further influence capital flows, bond yields, and emerging market currencies like the INR.
The RBI has been closely monitoring volatility in the forex market, but traders note that the central bank’s intervention has been measured.
