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Rupee weakens as USD/INR nears 95.22 on higher oil and softer Fed bets

USD/INR is supported near 95.22 while oil extends gains, and CME FedWatch puts September rate hike odds at 46%, down from 67% a week earlier.

Reported · Written up by our desk · Major Pairs

The Indian rupee opened lower versus the US dollar, with USD/INR rebounding to around 95.22 as higher oil prices extended a recovery move. FXStreet said the US dollar also regained some ground after a weak Friday.

Oil futures in India were firmer in early trading, with MCX Crude Oil futures expiring August 19 trading more than 1% higher at Rs. 7,500. FXStreet noted that currencies like the rupee can underperform when energy prices rise because import demand increases.

FXStreet pointed to renewed concerns around supply disruptions, including uncertainty over the Strait of Hormuz. It cited reports that Iran demands reparations from the US before allowing navigation, and added that Iran-aligned Houthis have continued attacks on oil tankers, including a reported drone strike on an Aramco refinery in Jazan.

The report also tied the dollar move to changes in interest rate expectations. It said the US dollar rebounded as higher oil de-anchored global inflation expectations, but it seemed unlikely to hold as traders trimmed hawkish Fed bets, with September rate hike odds at 46% versus 67% a week ago after weaker US labor data.

Latest closeWTI crude $78.07 ▲3.8%

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