MUMBAI (Sept 17): The Indian rupee is expected to be under pressure on Thursday and could weaken past the 96-per-dollar handle after the US ​Federal Reserve raised interest rates and signalled that further tightening is ‌in the pipeline.

The rupee is expected to open slightly weaker around 96-96.05 per dollar, down from its previous close of 95.9550.

The Fed raised interest rates by 25 basis points on ​Wednesday, its first increase since 2023, with officials expecting one more increase ​this year. The hike pushed the dollar index above the 100 ⁠mark to its highest level in more than a month.

Asian currencies slipped ​on Thursday, while equities traded mixed as investors digested the prospect of higher ​global borrowing costs. The Fed's hike follows a rate increase in Europe last week and precedes an anticipated rise in Japan on Friday, as central banks globally grapple with rising ​inflation.

"There are no immediate signs for inflation to ease, especially given the stalemate ​in the Middle East. This means the Fed may need to continue to tighten in ‌order ⁠to achieve its target," Tai Hui, APAC chief market strategist at JPMorgan Asset Management, said in a note.

Futures imply about a 50% chance of another Fed hike next month to rein in inflation. A total of three rate ​increases have been priced ​in for this ⁠tightening cycle.

The rate outlook is expected to add to pressure on the rupee, already weighed down by elevated oil ​prices and foreign portfolio outflows from Indian stocks and bonds.

Traders ​said that ⁠inflows linked to the IPO of India's largest stock exchange, along with interventions by the Reserve Bank of India, could help cushion the rupee. However, sentiment may ⁠worsen ​if the currency weakens past 96 and remains ​there, they added.

The National Stock Exchange of India (NSE) will open for subscriptions on Thursday after allocating shares worth US$703 ​million to anchor investors on Wednesday.

Uploaded by Siow Chen Ming