After 4 days of gains, rupee closes 32 paise lower at 88.13

Currency Market Overview - The Indian rupee closed 32 paise lower at 88.13 per dollar, compared to the previous close of 87.8150 [1] - The rupee had previously gained due to broad weakness in the dollar amid anticipation of a rate cut by the US Federal Reserve [2] - The US Fed cut interest rates by 25 basis points to a range of 4.00-4.25%, aligning with market expectations, but provided mixed forward guidance [5] Economic Implications - Fed Chair Jerome Powell indicated that future decisions would be made "meeting by meeting," leading to a temporary rebound of the dollar after an initial decline [2] - There is an expectation that dollar weakness may persist, with potential for a deeper rate cut cycle in 2026 than currently projected [4] - The impact of tariffs on growth and inflation is anticipated to become more pronounced as companies pass higher costs to consumers, which could negatively affect consumer demand [4] Trade Relations and Tariff Outlook - Investors are focusing on US tariff issues and weak foreign inflows in the equity market, which have negatively impacted the rupee [5] - Chief Economic Advisor V Anantha Nageswaran expressed optimism that the tariff dispute between India and the US may be resolved within two months, with potential withdrawal of penal tariffs [5] - Discussions are ongoing to reduce the reciprocal tariff from 25% to approximately 15%, which could benefit exporters [5]