The Indian rupee surrendered early gains on Wednesday, weakening against the US dollar as rising crude prices and uncertainty surrounding the Federal Reserve’s policy announcement weighed on sentiment. USD/INR approached Rs. 95.16 after opening stronger.
Oil Rally Raises Import Concerns
Brent crude futures rose 2.03% to USD 116.2 per barrel. US West Texas Intermediate (WTI) advanced 2.18% to USD 102.1 per barrel. November 19 MCX crude futures climbed 2.47% to Rs. 9,733, approaching their recent high of Rs. 9,828.
Yemen’s Iran-aligned Houthis said that they launched a ballistic missile toward Saudi Arabia’s Ras Tanura refinery, according to Reuters. The reported attack intensified concerns about regional energy supplies.
India imports much of its crude oil, making higher prices a potential burden on import payments and dollar demand. Meanwhile, the US 10-year Treasury yield rose 0.46% to approximately 5.02%, increasing pressure on emerging-market currencies.
Federal Reserve Decision Takes Center Stage
Markets broadly expect the Fed to maintain its benchmark interest-rate range at 3.75%-4.00% on Wednesday. Investors will scrutinize accompanying guidance for clues about another increase. According to ING Bank analysts, a December rate hike remains possible, while Wednesday’s decision could attract as many as three dissents favoring tighter policy.
Fed Governor Christopher Waller indicated that ‘more hikes are needed’ but ‘do not need to come at consecutive meetings.’ The FXS Fed Sentiment Index subsequently increased 0.42 points to 138.34, signaling a hawkish policy tone.
RBI Intervention and Rupee Technical Outlook
The Reserve Bank of India has sought to ease dollar demand through a special foreign-exchange window for oil refiners. According to a Traders Union report, estimated RBI support since June totaled USD 75-USD 80 billion through spot dollar sales and currency swaps.
Technically, USD/INR traded near 95.1355, below its 20-day exponential moving average of 95.3253. The Relative Strength Index around 44 indicated subdued upside momentum.
Final Thoughts
The rupee faces competing forces: central-bank support may limit volatility, while elevated oil prices and hawkish US policy expectations sustain pressure. Traders will watch the Fed’s message and whether USD/INR crosses 95.3253 over the coming sessions and weeks.
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