Indian rupee nearly flat as oil-led rally faces off against dollar demand; Fed verdict looms

MUMBAI: The Indian rupee ended broadly unchanged against the U.S. dollar on Wednesday, coming down from a six-week high and giving up almost all of the day’s gains that were triggered by a crash in oil prices.

The rupee opened higher at 94.4550 and extended gains to 94.2925 per U.S. dollar, its highest level since May 7.

However, the currency saw a quick turnaround amid rising dollar demand from corporates and importers, and ended at 94.5250, against its previous close of 94.5600.

A major headwind for the world’s third-largest oil importer is beginning to fade, after the benchmark Brent crude posted back-to-back 5% declines in last two sessions. The contract was trading below $80 per barrel, and is now less than 10% above pre-conflict prices.

This follows U.S. and Iran’s interim peace deal, with Washington agreeing to lift its blockade on Iranian ports and Tehran committing to restore tanker flows through the Strait of Hormuz.

The major focus now turns to the U.S. Federal Reserve’s policy decision, the first under Chair Kevin Warsh, due after Indian market hours.

While a rate move is unlikely, the commentary is expected to influence expectations for the policy path in 2026.

“What markets are watching is whether the dot plot removes the last projected rate cut for 2026, effectively signaling that the Fed’s easing cycle is over,” said Amit Pabari, managing director at FX advisory firm CR Forex.

“If Warsh sounds cautious for inflation, the dollar gets a floor. If he strikes a neutral tone and acknowledges that the oil shock is fading, the dollar softens further — and that gives the rupee more room.”

Still, underlying sentiment remains supportive after the recent steps by the central bank to support the currency.

Indian policymakers have rolled out a series of measures aimed at attracting dollar inflows, which had been under pressure in recent weeks.