The Indian rupee opened 10 paise higher at 95.02 against the US dollar on Wednesday, October 28. Investors stayed cautious as they awaited the US Federal Reserve’s policy decision. Meanwhile, rising crude oil prices put pressure on the currency, as traders watched for further market movements after the Fed’s key announcement.
The Indian rupee opened 10 paise higher at 95.02 against the US dollar on Wednesday (October 28), compared with Tuesday’s (October 27's) close of 95.12, as investors awaited the US Federal Reserve’s policy decision.
The rupee is tracking losses across most Asian currencies, with the Fed’s decision expected after Indian market hours.
Why is the rupee under pressure?
The rupee recovered on Tuesday (October 27) after slipping to an intraday low of 95.24, supported by dollar sales by state-run banks that may have been on behalf of the Reserve Bank of India (RBI), according to traders.
Traders see 95.30 as a key near-term support level. The RBI’s special dollar-purchase window for oil refiners has also helped cushion the impact of elevated crude prices.
How are crude oil prices affecting the rupee?
Brent crude rose 1.6% to $115.74 per barrel in Asian trading after an attack on a Saudi Arabian refinery revived concerns over supply disruptions in the West Asia.
Higher oil prices can increase India’s import bill and demand for dollars, putting pressure on the rupee and capital flows.
What to watch next
Markets widely expect the US Federal Reserve to keep interest rates unchanged on Wednesday. However, persistent inflation concerns have kept the possibility of further rate hikes alive.
ING Bank analysts expect a rate increase in December, according to the report. The Fed’s guidance could influence the dollar and emerging-market currencies, including the rupee.