US Fed Rate Cut Expected: Can Rupee Stabilize from Record Lows?

• The US Federal Reserve is expected to announce a policy decision on December 10, with markets largely pricing in a 25 basis point (bps) rate cut.
• Currency traders hope a 25 bps rate cut and dovish tone from the Fed could weaken the US dollar and offer relief to the Indian rupee, which is near record lows.
• Experts suggest a rate cut may provide sentiment-driven support to the rupee, but its overall impact might be limited as the move is already priced in by markets.
• The rupee recently strengthened to 89.88 against the US dollar but had hit an all-time low of 90.46 on December 4 due to trade uncertainty and capital outflows.
• The Fed's forward guidance on future rates is considered more crucial than the immediate cut for influencing foreign flows and the rupee's trajectory.

Why It Matters: US Fed's rate decision critically influences the Indian rupee's value.