Mumbai, Sep 18 (PTI) The rupee depreciated 28 paise to close at 88.13 (provisional) against the US dollar on Thursday, on hawkish Fed and a bounce back in the US dollar.

Forex traders said traders assessed the US FED outlook following a rate cut. The US FED reduced rates by a quarter point as expected and indicated that it will steadily lower borrowing costs for the rest of the year.

Moreover, the rupee remained under pressure on worries over US tariffs on India and global trade uncertainties. Besides, sustained foreign fund outflows also dented investor sentiments.

At the interbank foreign exchange, the rupee opened at 87.93 against the US dollar and touched an intra-day low of 88.16 before ending the session at 88.13 (provisional), down 28 paise from its previous close.

On Wednesday, the rupee appreciated 24 paise to close at 87.85 against the US dollar.

"The Indian rupee declined sharply on hawkish Fed and a bounce back in the US dollar. Fed cut interest rates by 25 bps, in line with estimates. It sees two more 25 bps rate cut in 2025 and just one 25 bps rate cut in 2026.

"Fed Chair Jerome Powell does not see elevated financial risks on tariffs. However, he raised downside concerns over labour market and GDP growth," Anuj Choudhary, Research Analyst Currency and commodities Mirae Asset ShareKhan, said.

Choudhary added that positive domestic markets and expectations of fresh FII inflows may also support the rupee. However, any recovery in the US dollar and/or US treasury yields may cap sharp upside.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.02 per cent to 96.89.

Brent crude, the global oil benchmark, was trading 0.43 per cent lower at USD 67.66 per barrel in futures trade.

On the domestic equity market front, the Sensex jumped 320.25 points to settle at 83,013.96, while the Nifty rose 93.35 points to 25,423.60.

Foreign Institutional Investors sold equities worth Rs 1,124.54 crore on a net basis on Wednesday, according to exchange data.

Meanwhile, Union Commerce Minister Piyush Goyal on Wednesday expressed confidence that India's exports would grow around 6 per cent this year compared to the corresponding period in 2024.

Underscoring the country's strong performance in global trade despite challenges, the minister said discussions on free trade agreements (FTAs) were advancing with several countries.

"India's exports would grow around 6 per cent this year compared to the corresponding period last year. I believe we will end the year on a positive note," Goyal said, adding that discussions on free trade agreements (FTAs) were advancing with several countries. PTI DRR TRB

Trade policy concerns and US tariff risks weigh on rupee, limiting recovery despite softer US rates. The rupee fell amid a stronger US dollar and a perceived hawkish Federal Reserve outlook despite a rate cut, with downward pressure compounded by concerns over potential US tariffs on India and sustained foreign institutional outflows; contemporaneous market indicators included dollar-index gains, lower crude futures, domestic equity rises, and reported net equity sales by foreign investors, while the Commerce Minister highlighted expected export growth and advancing free trade agreement discussions.