Rupee weakens past 85/USD as hawkish Fed outlook compounds bearish bias

The Indian rupee weakened past 85 to the U.S. dollar for the first time on Thursday after a markedly hawkish turn in the Federal Reserve's future rate projections pegged back Asian currencies across the board.

The rupee hit a low of 85.0650 in early trading, down 0.1% from its close at 84.9525 in the previous session.

The dollar and U.S. Treasury yields climbed after the Fed cut rates by 25 basis points on Wednesday, but its Summary of Economic Projections showed two rate cuts in 2025, down from four in September.


Asian currencies were down between 0.1% to 1.2% on the day, while the dollar index pared gains after hitting an over two-year high of 108.25 in Asia trading. The 10-year U.S. bond yield, meanwhile, rose above 4.5%.

The Fed's hawkish projections for future interest rates are likely to add to the local unit's troubles, which has remained under pressure on account of concerns about India's slowing economic growth and tepid portfolio inflows.