Rupee gains 20 paise at 85.88/USD, shrugging off uncertainty and returning to the 85 zone.

After US President Trump's criticism of Federal Reserve chair Jerome Powell and his plans to replace him early caused the dollar index to plummet to a multi-year low, the Indian rupee opened 20 paise higher on June 26. The currency ended the previous session at 86.09 versus the dollar and opened at 85.89. Trump has considered choosing and announcing Powell's replacement by September or October in an attempt to weaken Powell's position, according to a Wall Street Journal article. As a result, the dollar index dropped to 97.312, the lowest level in three and a half years, in early trading. The previous session ended at 97.679. Trump stated that when Powell's term ends next year, he has three or four candidates in mind to take over. After visiting the NATO summit, Trump stated at a news conference in The Hague on June 25 that "I know within three or four people." "Fortunately, he leaves pretty soon because I think he's awful." Trump did not specify a timeframe for a decision or list his possible candidates to succeed the central banker. Powell will leave office in May 2026. Earlier this month, Trump stated that he was thinking about Powell's successors and that they will be announced "very soon." The Indian rupee opened 20 paise stronger at 85.89 per US dollar on June 26, recovering from the previous close of 86.09. This gain came amid a sharp drop in the US dollar index, which fell to a three-and-a-half-year low of 97.312 during early trading. The decline was triggered by former US President Donald Trump's sharp criticism of Federal Reserve Chair Jerome Powell and his expressed intention to replace him before his term ends in May 2026. This political uncertainty rattled currency markets and boosted emerging market currencies, including the rupee. According to a report by The Wall Street Journal, Trump is actively considering Powell’s replacement and may announce a new nominee as early as September or October. While Powell's term officially ends in 2026, Trump’s remarks have raised concerns about the Fed’s independence and the possibility of a shift in US monetary policy direction. The previous session of the dollar index closed at 97.679, but following Trump’s statements, it dropped significantly in early trade, reflecting investor anxiety. Speaking at a press conference in The Hague after the NATO summit on June 25, Trump described Powell as “awful” and claimed he had already identified “three or four” potential candidates to lead the central bank. However, he did not disclose any names or commit to a specific timeline for the decision. These comments marked one of Trump’s most direct attacks on Powell since returning to the political spotlight, adding to the overall volatility in global financial markets. Trump’s ongoing criticism and the possibility of prematurely replacing the Fed chair have intensified uncertainty in currency markets. Investors now fear potential policy disruptions, and as a result, there has been a flight from the dollar toward other currencies. This situation has temporarily benefited the Indian rupee, which strengthened despite broader global market tensions. The coming months could bring further fluctuations as markets await clarity on Trump’s next moves and their potential impact on US monetary policy.