Markets price 58.5% odds of two Fed rate hikes this year, lifting the US Dollar Index to 100.90 and pressuring the rupee.
The Indian Rupee weakens against the US Dollar, with the USD/INR pair rising to near 94.60 in afternoon trade. The move follows a 0.15% gain in the US Dollar Index to 100.90, driven by growing expectations of Federal Reserve rate hikes this year.
Traders now assign a 58.5% probability of at least two Fed rate increases in 2024, up sharply from 17.1% a week ago. The shift follows the Fed’s latest economic projections, where nine of 19 policymakers signaled potential rate hikes this year.
Lower oil prices may provide some support for the rupee, as India’s import-dependent economy benefits from cheaper energy. Crude oil futures fell 1.35% to 7,163 on optimism over US-Iran negotiations.