Rising Fed hike bets pressure Indian rupee, oil worries linger

Business Recorder reported that the Indian rupee is likely to open weaker on Monday, with traders quoting a range of 95.55 to 95.60 against the dollar after it settled at 95.3775 on Friday. The currency faces pressure as investors raised their bets on a Federal Reserve rate increase at the September 15-16 meeting following hawkish remarks from Fed Chair Kevin Warsh.

Odds of a hike climbed to nearly 60% from about 35% before Warsh's Friday speech, in which he cautioned that policymakers would need to act if inflation did not drift back to its 2% target. ING Bank said his tone was more hawkish than his earlier comments on price stability. US stocks fell on Friday while the dollar strengthened and Treasury yields rose, and futures indicated further losses at Monday's open.

Asian currencies saw only a small spillover, with most moves capped near 0.2 per cent. Brent crude has climbed to $90 a barrel after a US attack on an Iranian island near the Strait of Hormuz drew retaliation from Tehran. A currency trader at a bank said the Reserve Bank of India is likely to lean against any move toward 95.70-95.80, a zone the market regards as well defended.