MUMBAI, Sept 19 (Askume) – The Indian rupee rose to its highest in six weeks on Thursday after the Federal Reserve eased policy and cut interest rates by 50 basis points, but traders expect dollar importers to limit direct gains from the currency they buy.
At 10:20 am Indian time, the rupee was trading at 83.66 against the US dollar, up 0.1% from its previous close of 83.75.
The local currency hit 83.6650 in early trade, its highest since August 1.
The US dollar index initially fell to its lowest level this year following the Fed’s decision to cut interest rates on Wednesday, but later rose to 101, supported by comments from Fed Chairman Jerome Powell that he sees no risk of a recession in the United States.
A “widespread” dollar sell-off on Thursday boosted the rupee, but the currency is unlikely to rise above 83.65, a private bank FX trader said.
“Importers will be very keen to buy dollars at these levels,” the seller said.
Asian currencies were mixed today, with the offshore yuan rising about 0.2%, while the Malaysian ringgit and South Korean won declined.
The Federal Reserve also updated its forecasts , predicting that the benchmark interest rate will fall by half a percentage point by the end of this year, a full percentage point next year, and half a percentage point in 2026.
Amit Pabari, managing director at forex advisory firm CR Forex, said that after the Fed cut interest rates, “all eyes will be on the Reserve Bank of India’s (RBI) response and whether the rupee can better maintain its appreciation trend.”
Traders expect the Reserve Bank of India to absorb dollar inflows to boost foreign exchange reserves and keep India’s exports competitive, preventing a sharp appreciation of the local currency.
