Rupee Bounces Back Despite Fed Hike Fears

The Indian Rupee (INR) has regained some ground against the US Dollar (USD) despite concerns over further Federal Reserve interest rate hikes. The RBI's intervention is believed to have limited the decline in the INR, with state-run banks reportedly offering USD on behalf of the central bank.

The Fed's decision to raise interest rates by 25 basis points to a range of 3.75%-4.00% has led to a sharp rally in the US Dollar. The US Dollar Index (DXY) is near its six-week high of 100.37, while the USD/INR pair trades marginally lower at 95.90.

Economists at NBC Economics and Strategy argue that the Fed's updated dot plot suggests a higher-for-longer policy bias, with policymakers expecting at least one interest rate hike this year. The RBI may also consider tightening monetary policy to counter rising inflationary pressures, which have accelerated to 4.82% Year-on-Year (YoY) in August.