Rupee weakens near 95.5 as Fed hike odds and oil rise
Indian rupee weakened to around 95.5 per dollar after renewed Fed hike expectations lifted the dollar and US Treasury yields. Markets lifted September hike odds to nearly 60% on hawkish remarks, while Brent neared $90.
The Indian rupee weakened to around 95.5 per dollar, after trading largely flat in the previous week, as renewed expectations of a Federal Reserve rate hike strengthened the dollar and pushed US Treasury yields higher.
Markets raised the probability of a September rate increase to nearly 60% following hawkish remarks from Fed Chair Kevin Warsh, increasing pressure on the rupee.
Higher crude prices also weighed on sentiment, with Brent approaching $90 a barrel amid renewed tensions around the Strait of Hormuz.
However, persistent foreign-currency inflows and RBI intervention are expected to limit the currency's downside, with the 95.70-95.80 zone seen as a well-defended level.
India's forex reserves reached a record $729.33 billion in the week to August 21, rising for an eighth straight week as RBI measures attracted nearly $73 billion in inflows, including about $65 billion from non-resident Indian deposits.