Rupee slips to 95.56 as oil climbs and Fed hike odds rise

The rupee began Monday at 95.56 against the U.S. dollar, 13 paise weaker than its prior close, as crude oil prices rose and geopolitical friction in the Middle East heightened market anxiety. Brent crude futures jumped 1.34% to $89.28 a barrel after a U.S. strike on Iran’s Larak Island and Iranian retaliation, reviving supply-risk premiums. Expectations of a September Federal Reserve rate increase have grown, pushing U.S. Treasury yields higher and supporting a broader dollar rally reflected in a 99.62 dollar index.

Anil Kumar Bhansali, head of treasury at Finrex Treasury Advisors LLP, forecast limited rupee movement, likely staying between 95.25 and 95.75, with exporters selling near 95.60 and importers buying any dips. The Reserve Bank of India is active in the forex market to prevent a sharp slide, while better-than-expected flows under the FCNR(B) scheme offered some relief. Indian equity benchmarks opened lower, with the Sensex down 226.60 points and the Nifty down 120.40 points, as foreign institutional investors sold over Rs 5,039.80 crore of shares on Friday. The RBI also reported that foreign exchange reserves rose by $12.422 billion to a record $729.328 billion for the week ending August 21.