Lower Fed hike odds, oil dip lend RBI hand in supporting Indian rupee

Business Recorder reported that the rupee in India has an easier backdrop on Wednesday, helped by reduced bets on another US rate increase and a slight easing in crude prices. Traders expect the currency to open between 95.94 and 95.99 per dollar, following Tuesday's close at 95.98. Earlier the rupee had slipped to a two-month low of 96.1475 before recovering, likely because of intervention by the Reserve Bank of India.

Over recent weeks the central bank has repeatedly stepped in to limit the currency's slide, as costly oil, higher US Treasury yields, thin portfolio inflows and heavier hedging demand have put it under strain. The RBI is drawing on its larger foreign exchange reserves to stop outside pressures from turning into excessive stress on the rupee. Amit Pabari of CR Forex said the authorities appear determined to hold the currency near 96 per dollar, which is providing a floor.

Odds of another Federal Reserve rate increase next month have dropped to 44% from nearly 70%, reflecting softer US economic readings and more measured remarks from officials on a quick follow-up move. US consumer sentiment slid in September to its weakest level in more than 12 years, while John Williams of the New York Fed said the bank can take time to review new data before acting. Separately, oil fell about 2.5% on Tuesday as Middle East shipments showed signs of recovery.