Indian rupee faces more pressure with likely Fed rate hike compounding oil pain

According to Business Recorder, the Indian rupee was expected to open slightly weaker on Wednesday, with traders warning it could slip below the 96 level against the dollar. The currency settled at 95.9550 per dollar on Tuesday, extending a losing run that has cost it roughly 1.5% despite near-daily central bank intervention. Two weeks earlier the rupee was near 94.30, and its decline has been largely steady since then.

Rate futures now imply a better-than-90% likelihood that the Federal Reserve raises rates later in the day, compared with roughly 60% seven days earlier, according to the CME FedWatch Tool. The shift follows a rise in Brent crude toward $110 per barrel, which has heightened inflation worries and drove US yields to their highest levels in several years. Investors are expected to focus on the Fed's updated dot plot and economic projections for signals on whether another hike is possible this year.

A Goldman Sachs note suggests the Fed may try to temper bets on an October hike, though not through its statement. Chair Kevin Warsh could instead tell his press conference that policymakers will carefully assess incoming data before any further moves.