Indian rupee may withstand oil, Fed pressures with RBI support

Business Recorder reported that the Indian rupee is expected to open quietly on Monday, with the Reserve Bank of India's recent firm presence in the market likely to cushion higher crude prices and a growing chance of a US Federal Reserve rate increase next week. Traders expect the currency to begin trading between 94.46 and 94.50 per dollar, after it closed Friday at 94.4850.

The currency gained close to 1 per cent last week, easing some of the bearish sentiment, as the central bank's ongoing intervention helped offset costlier oil and a more hawkish Federal Reserve outlook. A trader at a bank said the RBI has changed the tone for the rupee, and the key question is whether it stays this active to sustain or extend the gain.

Brent crude climbed to $97 a barrel as tit-for-tat strikes between the US and Iran affected vessels in the Strait of Hormuz, raising fears of a prolonged Middle East supply disruption. US nonfarm payrolls rose by 162,000 last month, beating economists' forecast of 56,000, and the July figure was revised to a gain of 21,000 from a drop of 23,000. ING Bank said the outcome pushed expectations of a September rate hike higher, though the final call depends on Friday's inflation data.