By Jaspreet Kalra
MUMBAI, September 4 (Reuters) – The Indian rupee was little changed on Thursday, wedged between imported dollar demand and modest foreign portfolio inflows, although analysts reckon that the currency’s laggard performance compared to peers this year is likely to persist.
The rupee was at 88.1225 per U.S. dollar as of 10:45 a.m. IST, modestly lower from its close at 88.07 in the previous session.
Dovish remarks from U.S. Federal Reserve officials, coupled with signs of softness in the U.S. labour market, pressured the dollar, while the rupee found additional support from a post-market announcement of tax cuts on hundreds of consumer goods on Wednesday.
India’s benchmark equity indexes, both the BSE Sensex and Nifty 50 rose 0.8%, while the yield on the benchmark 10-year government bond edged down as the tax cut’s impact on government revenues was estimated to be lower than anticipated.
According to traders, the rupee is likely to consolidate in the 87.50-88.30 range in the near term after dipping to an all-time low of 88.33 last week on worries over steep U.S. tariffs.
The local currency has lagged behind its peers over 2025 and is down about 3% on the year so far, while its Asian counterparts such as the Korean won and Chinese yuan have strengthened by about 5.5% and 2%, respectively.
Analysts at Goldman Sachs said in a note that the rupee’s underperformance is likely to persist on the back of tariff developments and their macroeconomic impact, continued equity outflows and the potential of India’s weightage being changed in the JPMorgan Government Bond Index for Emerging Markets.
This week investor focus is also on U.S. economic data to gauge the odds of policy easing by the Fed. The critical U.S. non-farm payrolls report is due on Friday.
Money markets have nearly fully priced in a 25-basis-point cut, according to CME’s FedWatch tool.
(Reporting by Jaspreet Kalra; Editing by Eileen Soreng)
