Indian rupee set for mild relief from dip in oil, fading Fed October hike bets

Business Recorder reported that the Indian rupee could get some breathing room on Monday as cheaper crude and a retreat in bets on an October Federal Reserve rate increase take some strain off the currency. Traders expect it to open between 96.22 and 96.26 per dollar, after settling at 96.3150 on Thursday, because Indian markets were closed on Friday for a holiday.

The rupee has faced steady downward pressure and has slipped convincingly through 96 per dollar to its weakest level in two months. Higher US Treasury yields, which have lifted the dollar, and sustained high oil prices have been the key drags. The Reserve Bank of India has stayed active in the market, helping to slow the decline, but traders now see more room for further losses since the 96 mark has been decisively broken.

The chance of a Fed rate hike at this month's meeting has dropped to roughly 20% after the US labour market added fewer jobs than forecast. Morgan Stanley noted that investors were unwilling to read too much into one weak jobs figure while inflation risks stayed elevated, so the rupee's relief may be short-lived, according to traders. Crude prices fell on Monday after Middle Eastern shipments increased and Group of Seven countries released oil from reserves, easing supply worries.