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Rupee slips after three-day gain as oil rebounds and dollar firms

USD/INR rose to around 95.85 as crude oil futures jumped, raising pressure on a rupee that is sensitive to imported energy costs.

Reported · Written up by our desk · Major Pairs

The Indian rupee edged lower against the US dollar on Wednesday after a three-day winning streak, with USD/INR rebounding to near the 95.85 area in intraday trading. The move came as oil prices strengthened sharply, with India’s MCX Crude Oil contract expiring Aug. 19 up 3.4% to around Rs. 7,860 and snapping a three-day losing streak. FXStreet notes that higher crude prices can weigh on the rupee because India meets about 85% of its energy needs through imports, which can increase foreign outflows from reserves.

FXStreet also links the oil jump to renewed Middle East tensions that could disrupt supply. It points to US Central Command and Saudi Arabia reporting precision strikes targeting Iran-backed groups, and to fears around a prolonged closure of the Strait of Hormuz, which carries nearly 20% of global energy supply.

With markets looking ahead to the Federal Reserve’s policy decision later in the day, FXStreet says traders using the CME FedWatch tool see a 69.5% chance rates stay unchanged at 3.50% to 3.75%. In the broader risk backdrop, the US Dollar Index was slightly lower near 101.25, while the rupee’s reversal was driven mainly by the oil rebound.

Latest closeWTI crude $81.23 ▼1.7%|Dollar index 101.39 ▼0.1%

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