Rupee Rises to One-Month High Ahead of Fed Decision, Trade Talks Lift Sentiment

Rupee Sees Strongest Gain in a Month Ahead of Fed Rate Decision and Trade Talks Boost

The Indian rupee strengthened on Wednesday, posting its best daily performance in a month, as a softer U.S. dollar and optimism over India-U.S. trade discussions supported sentiment.

The local currency touched an intraday high of 87.73 before settling at 87.8150, up 0.27%, marking its sharpest single-day gain since August 19.

The rebound comes after the rupee had slipped to a record low of 88.4550 last week due to concerns over steep U.S. tariffs. Improved risk sentiment from ongoing trade negotiations between New Delhi and Washington, along with expectations of imminent U.S. Federal Reserve easing, have helped the currency recover modestly.

Analysts, however, cautioned that further appreciation may be capped. “Dollar demand from importer hedging will likely limit gains around the 87.50 level,” an FX dealer at a foreign bank noted.

Money markets have fully priced in a 25 basis point Fed rate cut, with investor focus shifting to remarks by Fed Chair Jerome Powell and updated projections from U.S. policymakers.

“While the short-term trend favors a stronger rupee, any hawkish tilt from the Fed or negative surprises on the trade policy front could quickly reintroduce volatility,” said Abhishek Goenka, CEO of IFA Global.