Indian rupee seen steady after holiday as Fed hike risk, hedging balance out RBI, oil relief

According to Business Recorder, the rupee was expected to open with little movement on Thursday, as lower oil prices and steady central bank intervention counterbalanced a possible US Federal Reserve rate increase next month and ongoing dollar buying for hedging. Traders quoted an opening range of 95.40 to 95.44 against the dollar, after the currency closed 0.35 per cent stronger at 95.4125 on Tuesday. Markets in India were shut on Wednesday.

Interbank traders see the dollar/rupee pair moving between 95.00 and 95.80 in the near term, with Reserve Bank of India intervention keeping it below the 96 level. The central bank has been stepping in almost every day over the past fortnight, especially when the pair reached 95.60 to 95.80. On Tuesday, a drop in oil prices strengthened that support, lifting the rupee by its largest single-session gain in almost a month.

Brent crude stood at about $87.30 a barrel on Thursday, well below a recent peak of about $95.80. A bank-based currency dealer said the pair would likely stay within a narrow band, as steady dollar demand from importers limits any fall. Meanwhile, the dollar index hovered near an eight-day high after US inflation and other figures nudged up bets on a Fed rate hike next month, with focus on Fed Chair Kevin Warsh's Jackson Hole speech.