Indian rupee ongoing rally backed by ebbing Fed hike odds, soft oil

MUMBAI: The Indian rupee may nudge higher at Thursday’s open, supported by the broad dollar weakness on diminishing odds of ​a Federal Reserve rate hike next month and Brent crude ‌largely holding on to its recent decline.

The Indian rupee is expected to open in the 95.04-95.08 range, according to traders, after settling at 95.1175 per U.S. dollar on ​Wednesday.

The currency on Wednesday climbed past the 95-per-dollar level for ​the first time in a month, before running into demand ⁠for dollars from companies and intraday speculative players.

Volatility in oil prices ​added another layer of pressure on the rupee, which has now recovered ​about 1.7% from its recent lows.

The rupee briefly weakened to nearly 95.25 during Wednesday’s session before recovering.

Wednesday was the kind of session that “was largely supportive of the rupee ​and kept the underlying bias positive,” said a currency trader at ​a bank.

“The rupee was always going to face resistance past the 95 level. The ‌fact ⁠that it encountered resistance there and the damage was limited underscores the underlying positive trend,” the trader added.

Dollar’s struggles

Asian currencies inched higher against the dollar on Thursday, while the dollar index dipped to 99.64.

Diminishing odds ​of a Fed ​rate hike next ⁠month, along with optimism surrounding a potential U.S.-Iran deal, weighed on the dollar.

Oil prices fell on Thursday with ​investors assessing whether progress in Iran-Oman talks could ​pave the ⁠way for a U.S.-Iran peace agreement.

Brent crude futures dropped to $79.04, before inching higher to $79.68.

Lower oil prices and soft U.S. private employment data prompted traders to ⁠scale back ​expectations of a Fed rate increase in ​September.

The implied probability of a September hike stood at 55%, down from nearly 70% at ​the start of the week.