I am using WebStorm 2016.1 and have configured PowerShell as the terminal by using powershell.exe
as the shell path in WebStorm's terminal settings:
When I open the terminal it does not open in the current project folder, but in my home folder.
How do I make it open in the current project folder?
Works fine for me. Do you have any PowerShell $PROFILE files? if yes, check if 'Set-Location' is specified there. See also https://superuser.com/questions/507387/autorun-for-powershell
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