Rupee falls 9 paise to close at 86.64 against U.S. dollar

The rupee depreciated 9 paise to close at 86.64 (provisional) against the U.S. dollar on Thursday (January 30, 2025), weighed down by a strong U.S. dollar amid a hawkish tone of the U.S. Federal Reserve.

Forex traders said the rupee continued to face pressure due to sustained foreign fund outflows and the broad strength of the American currency in the overseas markets.

At the interbank foreign exchange, the rupee opened on a weak note at 86.58 and touched a high of 86.56 and a low of 86.65 against the American currency during the session.

The local unit settled at 86.64 (provisional), registering a fall of 9 paise over its previous close.

On Wednesday (Jan. 29), the rupee pared its initial losses to settle on a positive note, higher by 2 paise to close at 86.55 against the U.S. dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02% lower at 107.98.

“U.S. Dollar gained on the hawkish tone of the U.S. Federal Reserve. Fed kept interest rates unchanged at 4.25-4.5% at its Federal Open Market Committee [FOMC] meeting on Wednesday [Jan. 29],” said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.

The U.S. Fed kept rates on hold but was hawkish in its outlook as it said rates would be held higher for a longer period, downplaying expectations for future rate cuts.

“We expect the rupee to trade with negative bias on strength in the U.S. Dollar and selling pressure from FIIs. Month-end Dollar demand from importers may also weigh on the rupee,” Choudhary added.

There is uncertainty over tariffs by the U.S. administration, which may further pressure the rupee. However, any central bank intervention may support the rupee.

Traders may take cues from GDP and weekly unemployment claims data from the U.S.. Investors may remain cautious ahead of the Union Budget of February 1 and the RBI’s bond buying on Friday, which may lead to volatility, Mr. Choudhary added.

Brent crude, the global oil benchmark, fell 0.64% to $76.09 per barrel in futures trade.

In the domestic equity market, the 30-share BSE Sensex settled 226.85 points, or 0.30%, up at 76,759.81 points, while the Nifty rose 86.40 points, or 0.37%, to close at 23,249.50 points.

Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,586.43 crore in the capital markets on a net basis on Wednesday, according to exchange data.