Dollar weakness keeps rupee from slipping further
Forex traders say the rupee found support after the US dollar weakened in overseas markets. The softness in the greenback is being driven by growing expectations that the US Federal Reserve will cut interest rates in December.
Why the dollar is under pressure
Markets are increasingly pricing in a Fed rate cut, which tends to reduce demand for dollars because yields on US assets look less attractive. That drop in demand, combined with calmer global risk sentiment, has pushed the dollar lower against many currencies.
What this means for the rupee
When the dollar eases, currencies like the rupee often benefit. Traders say the weaker dollar helped support the rupee at lower levels, preventing a sharper decline even when local pressures emerged. In simple terms, the rupee’s losses were capped because the dollar wasn’t gaining strength.
What traders are watching next
- US Fed guidance: Any firm signal about a December rate cut could keep the dollar soft.
- Economic data: US inflation and jobs numbers will be closely watched for clues on policy timing.
- Global risk appetite: Shifts in investor sentiment can quickly affect currency flows into and out of emerging markets.
The immediate outlook depends largely on US policy signals and data. If rate-cut expectations persist, the rupee may remain supported; a surprise shift in Fed communication could change that picture quickly.