FX.co ★ Rupee Climbs on Oil Relief

The Indian rupee firmed to about 90.18 per US dollar, rebounding from near-record lows as easing tensions in the Middle East improved risk sentiment. Concerns over India’s import bill and inflation outlook moderated after Brent crude retreated to around $93 per barrel, following a pullback in oil prices from last week’s spike to $102 per barrel. The decline came after the United States paused its strikes on Iran, which had followed two weeks of attacks.

The rupee also drew support from expectations of continued foreign currency inflows. RBI Governor Malhotra noted that the central bank’s dollar-mobilization measures have attracted nearly $32 billion so far, up from $20 billion as of July 17. This stronger inflow outlook is expected to enhance the RBI’s ability to curb excessive exchange-rate volatility, after its recent market intervention helped steer the rupee away from fresh record lows.

Investors are now focused on this week’s Federal Reserve policy meeting. Markets largely expect the Fed to leave interest rates unchanged, while still assigning a high probability to a rate hike in September.