The Indian rupee’s recent
recovery may falter on Wednesday with volatile crude prices and
lingering Federal Reserve rate concerns tempering the positive
momentum.
The currency has drawn support over the last three sessions
from likely intervention by the Reserve Bank of India, which
traders expect will continue to underpin the currency. However,
volatile oil prices and the possibility of a hawkish signal from
the Fed could challenge the recovery, traders said.
The rupee is expected to open marginally higher, before
coming under pressure later in the session. The currency settled
at 95.8525 per U.S. dollar on Tuesday.
The RBI right now is a major anchor for the rupee, a
currency trader at a bank said. He expects the RBI’s presence to
remain a key tailwind, particularly after its recent practice of
stepping in ahead of, or around, the market open.
Crude oil swings
The rupee will have to contend with the continued choppy
prices action in oil. Brent crude, having dropped 4.8 per cent to near
$82.50 per barrel, is back on the way up, trading near $87.50.
Oil prices have whipsawed on the U.S.-Israeli war on Iran
with investors watching developments in West Asia.
Iran’s Revolutionary Guards say three oil tankers were
“struck and stopped” a few hours back after ignoring warnings in
the Strait of Hormuz.
Fed looms
The dollar index held near a one-month high on
Wednesday amid renewed hostilities in the Middle East, while
traders awaited a key Federal Reserve interest rate decision
later in the day.
Markets largely expect the Fed to hold rates unchanged,
though a 30 per cent chance of a 25-basis-point hike remains priced in.
“We think that the Fed will have no choice but to strike a
hawkish note,” amid the ongoing U.S.-Iran conflict, Matthew
Ryan, head of market strategy at financial services firm Ebury,
said.
Fed Chair Kevin Warsh’s characterisation of the oil spike
will be important for markets, he said.
Published on July 29, 2026
