Rupee Pauses Slide on Lower Oil, Fed Bets

The Indian rupee hovered around 96.2 per dollar, pausing losses after reaching two-month lows as softer oil prices and fading bets on a Federal Reserve rate hike this month offered some relief to the currency. Oil prices slipped as rising crude exports from the Middle East and stockpile releases by Group of Seven nations eased supply concerns, while weaker-than-expected US jobs data reduced the probability of a Fed hike to around 20%. However, the dollar remained firm near a 17-month high and elevated US Treasury yields continued to weigh on the rupee. The RBI remained a consistent presence in the foreign exchange market, helping contain the rupee’s decline, although the decisive breach of the 96-per-dollar level has heightened the risk of further weakness. Meanwhile, markets are increasingly pricing an RBI rate hike this week as inflationary pressures broaden, with consumer inflation at 4.82% in August and growth at 7.8% in Q2.