The Indian Rupee remains range-bound due to a stronger US Dollar and lower oil prices, with Fed rate hike expectations weighing on emerging markets.
The Indian Rupee (INR) traded flat against the US Dollar (USD) at around 94.70 on Tuesday, extending Monday’s gains. A firmer US Dollar, driven by expectations of Federal Reserve rate hikes, capped the rupee’s upside, while declining oil prices limited losses.
The US Dollar Index (DXY) hovered near 101.00, its highest level in over a year, as markets priced in multiple Fed rate increases. Bank of America analysts forecast three 25 basis points hikes in September, October, and December, reversing earlier expectations of no changes this year. The Fed’s recent dot plot also signaled a more hawkish stance.
Lower oil prices, linked to progress in US-Iran negotiations, provided some support for the INR by easing import cost pressures. However, the currency’s near-term outlook remains constrained by the stronger USD and shifting Fed policy expectations.