Currency Market News: Rupee gains 23 paise to 84.54 vs US dollar after Fed rate pause

Rupee appreciated by 23 paise to open at 84.54 against the US dollar in early trade on Thursday, supported by sustained foreign inflows and a softer dollar, after the US Federal Reserve kept its key interest rate unchanged.

At the interbank foreign exchange, the local unit opened at 84.61, touched a low of 84.65, and strengthened to 84.54 against the greenback—marking a 23-paise gain from Wednesday’s close of 84.77.

On Wednesday, the rupee had slipped sharply by 42 paise to end at 84.77 due to heightened geopolitical tensions following India’s precision strikes on terror camps in Pakistan and Pakistan-occupied Kashmir under Operation Sindoor. The currency had touched an intraday low of 84.94 before closing slightly higher at 84.8250.

Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, noted the rupee opened stronger as there was no further escalation overnight, although border tensions remain elevated. He added that while the volatility index has climbed, falling premiums indicate surplus liquidity, partly due to the RBI’s ongoing Open Market Operations (OMOs).

The US dollar index was marginally higher at 99.65, up 0.04 per cent, while Brent crude rose 0.70 per cent to USD 61.65 a barrel after losing more than a dollar in the previous session due to global demand concerns.

On the capital markets front, foreign institutional investors (FIIs) were net buyers, picking up equities worth Rs 2,585.86 crore on Wednesday.

Meanwhile, the Federal Open Market Committee (FOMC) left interest rates unchanged in the 4.25 per cent-4.50 per cent range as expected. Fed Chair Jerome Powell said it remains uncertain whether the US economy can sustain its growth trajectory amid inflation risks and trade headwinds.

Separately, a top US military official said Washington is “watching the situation very closely” following India’s missile strikes in PoK and Pakistan’s Punjab region.

Sensex, Nifty open higher amid Indo-Pak tensions

Indian equities opened on a positive note on weekly expiry day, supported by the US Fed’s decision to hold key interest rates and despite rising Indo-Pak tensions. The BSE Sensex rose 133.18 points (0.16 per cent) to 80,879.96 at open, while the Nifty50 gained 25.15 points (0.1 per cent) to 24,439.55. Broader markets outperformed, with the smallcap index leading the gains.