The Indian rupee held steady around 95.4 per US dollar, trading near a two-week high after the holiday break, as softer oil prices and continued intervention by the Reserve Bank of India (RBI) helped counter expectations of a Federal Reserve rate hike next month and ongoing dollar demand for hedging. The rupee had closed 0.35% higher on Tuesday, before foreign exchange and money markets were shut for a holiday on Wednesday.
Brent crude extended its decline to around $87.30 per barrel, while the RBI has been intervening in the market almost daily over the past two weeks, especially when the USD/INR pair approached the 95.60–95.80 range, curbing further gains in the dollar. At the same time, the US dollar index hovered near an eight-day high after stronger inflation data in the United States reignited expectations of a Fed rate hike in September. Markets are now focused on Fed Chair Kevin Warsh’s upcoming remarks at the Jackson Hole symposium for additional guidance on the future path of interest rates. Persistent dollar demand from importers is also expected to cap further downside in USD/INR.
