Traders pivot from oil markets to US monetary policy, pushing INR to fresh lows amid expectations of Fed tightening.
The Indian Rupee extended losses as investor focus shifted from declining oil prices to the Federal Reserve’s potential rate hikes. The currency’s decoupling from oil follows the latest FOMC decision, with markets pricing in a 55% chance of a September rate increase after July odds fell to 24% post-US jobs data.
Prior to this shift, the Rupee had tracked oil price movements closely, but Fed policy now dominates sentiment. A softer US CPI print next week could offer temporary relief, while an upside surprise may drive INR to new record lows against the USD. The currency remains structurally bearish, with traders eyeing technical levels for potential dip-buying opportunities.
The US dollar stayed rangebound ahead of key events, including Fed Governor Waller’s speech and Wednesday’s FOMC minutes. Limited forward guidance from Fed Chair Powell has left markets parsing these releases for clues on future policy moves.