Indian rupee to weaken as oil, US yields weigh; fading Fed hike bets offer no relief

According to Business Recorder, the Indian rupee was set to weaken on Thursday as higher oil prices and US Treasury yields added pressure, while fading bets on an October Federal Reserve rate increase offered little support. Traders expected the currency to open between 95.96 and 95.98 against the dollar, after it settled at 95.83 on Wednesday.

The rupee had earlier slipped to a low of around 96.14 per dollar on Tuesday, but it has since recovered some ground, which traders linked to probable Reserve Bank of India intervention. Anil Bhansali of Finrex Treasury Advisors called the 96 level a key psychological and technical zone, noting that the currency has shown resilience each time it nears that mark. He expects downside pressure to persist while oil and US yields stay elevated, with central bank action likely to limit rather than reverse the decline.

Brent crude for December delivery gained almost 2% on Wednesday, supported by stalled US-Iran talks and tightening fuel markets, extending its September rise to about 14%. Meanwhile, US 10-year Treasury yields neared their highest since 2007 even though August inflation came in softer than forecast. Odds of a Fed rate increase at the October meeting have fallen below 40%, down from more than 70% a week earlier.