Rupee falls 12 paise to all-time low of 85.06 against US dollar in early trade

The rupee dropped 12 paise to an all-time low of 85.06 against the US dollar in early trade on Thursday, as a hawkish tilt from the US Federal Reserve sparked a broad dollar rally.

Forex traders said the US Federal Reserve has adjusted its projections for 2025, signalling a more cautious monetary policy stance, pressuring emerging market currencies, including the Indian rupee.

At the interbank foreign exchange, the rupee opened on a weak note and breached the crucial 85.00 level against the greenback.

It fell further to an all-time low of 85.06 against the American currency, registering a fall of 12 paise over its previous close, as dollar demand from importers, foreign fund outflows and a muted trend in domestic equities further dented investor sentiments.

On Wednesday, the rupee dropped 3 paise to close at an all-time low of 84.94 against the US dollar.

The US FED cut rates by 25 basis points but was very hawkish in its approach as it said that it might take another year or two to get to 2% on inflation. It expects cuts of 50 bps in 2025 and another 50 bps in 2026.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.01% at 108.03.

Brent crude, the global oil benchmark, fell 0.42% to $73.08 per barrel in futures trade, on a surging dollar and a hawkish FED after it signalled slower easing.

In the domestic equity market, the 30-share BSE Sensex was trading 910.95 points or 1.144% down at 79,271.25 points in morning trade, while Nifty was down 281.15 points or 1.16% to 23,917.70 points.

Foreign Institutional Investors (FIIs) offloaded ₹1,316.81 crore in the capital markets on net basis on Wednesday, according to exchange data.