Mumbai, Sep 18 (PTI) The rupee depreciated 35 paise to close at 88.20 against the US dollar on Thursday, as a strengthening greenback against major crosses overseas sapped investors' risk appetite amid global trade uncertainties.

The domestic unit remained under pressure on worries over US tariffs on India and sustained foreign fund outflows, forex traders said.

Traders also assessed the US Fed's indication that it will steadily lower borrowing costs for the rest of the year, they added.

"The rupee's four-day rally hit a snag, mirroring the weakness in regional currencies. The dollar rebounded sharply after the Fed's 25-basis-point rate cut, especially as the 'dot plot' suggests two more cuts are on the table by late 2025," Dilip Parmar - Senior Research Analyst, HDFC Securities, said.

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 88.20, down 35 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 cuts in 2025 and just one 25 bps rate cut in 2026.

"Fed Chair Jerome Powell does not see elevated financial risks from 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 bought equities worth Rs 366.69 crore on a net basis on Thursday, 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 DRR BAL BAL

Currency depreciation: rupee weakens as stronger dollar, policy signals and trade concerns pressure markets and capital flows. Rupee depreciation reflected a stronger US dollar driven by Federal Reserve guidance indicating further rate adjustments, compounded by worries over potential trade tariffs and continued foreign fund outflows; domestic equity strength and prospects of renewed foreign institutional inflows offered limited support while oil prices and US treasury yields influenced near-term exchange-rate dynamics.