Rupee's Woes Persist: Fed Rate Cut Offers Little Relief

• The Indian rupee has had a turbulent year, dropping 5% since January and becoming Asia's worst-performing currency, recently slipping past 90 per dollar.
• The RBI intervened with a 25 bps rate cut, open-market bond purchases, and a $5 billion buy-sell swap to ease dollar tightness.
• Analysts predict a US Fed 25 bps rate cut this week, but believe its positive impact on the rupee will be muted as it's already priced in.
• India's widening trade deficit, patchy foreign inflows, and geopolitical tensions are key factors preventing significant rupee appreciation.
• The rupee's weakness is primarily due to India-specific issues like increased dollar demand for imports and corporate hedging, rather than broad dollar strength.

Why It Matters: Rupee's weakness is structural; a US Fed rate cut won't provide much relief.