After the US Fed signals fewer rate reduction in 2025, the rupee depreciates to 85 to the dollar.

After the US Federal Reserve signaled fewer rate reduction in 2025, which caused the dollar index to reach a two-year high, the rupee fell further into the red and broke 85 in trade with the US dollar for the first time ever. On December 19, the Indian currency depreciated more from its close of 84.96 the day before, opening at 85.04 against the US dollar. Moneycontrol predicted on December 18 that the rupee might reach 85 vs the US dollar. For the third time in a row, the Federal Reserve decreased its key policy rate on Wednesday, lowering it by a quarter of a percentage point. In December 2022, when rate rises were in effect, the Federal Open Market Committee lowered its overnight borrowing rate to a target range of 4.25 to 4.5 percent. The carefully studied 'dot plot' matrix of individual members' future rate estimates also showed that it will cut the rates twice more in 2025. In a press conference, Fed head Jerome Powell stated, "I think we're in a good place, but I think from here it's a new phase and we're going to be cautious about further cuts," according to news agency Reuters.