The Indian rupee declined past 85 to the U.S. dollar for the first time on Thursday after the Federal Reserve signalled fewer rate cuts next year, piling more pressure on a currency already struggling with tepid capital flows.

Sustained dollar strength and rising global interest rates add to the rupee’s vulnerability. USD/INR pair broke off the resistance level of 85.00, with potential depreciation towards 85.18 – 85.35. Conversely, a breach below 84.78 could expose support ...

The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.01 per cent at 108.03.

The Indian rupee weakened past 85 to the U.S. dollar for the first time on Thursday after a markedly hawkish turn in the Federal Reserve's future rate projections pegged back Asian currencies across the board.

The US cut interest rates by 25 basis points to bring down the Fed Funds rate to 4.25-4.50 per cent. The rupee was trading at 85.06 per dollar a little after 11am. The yield on the 10-year benchmark government bond rose by 4 basis points and was trading at 6.

The Indian rupee hit an all-time low of 85.06 against the US dollar after the US Fed signaled fewer rate cuts next year, triggering a dollar rally and impacting emerging market currencies.