Indian Rupee Dips as Oil Prices Rise and US Dollar Rebounds

The Indian Rupee (INR) has opened on a negative note against the US Dollar (USD), starting the week on a weak footing. The USD/INR pair is trading near 95.22, rebounding from its Friday losses as oil prices continue to recover and the US Dollar regains ground.

The price of MCX Crude Oil futures expiring on August 19 has risen over 1% to Rs. 7,500, contributing to the Rupee's decline. Economies heavily reliant on oil imports, such as India, tend to underperform in a high-oil-price environment.

Renewed uncertainty over the reopening of the Strait of Hormuz due to Iran's compensation demands has boosted oil prices. This has also led to increased concerns about global supply disruption. The US Dollar Index (DXY) is trading 0.12% higher at near 99.72, further limiting the Rupee's upside.

Traders have scaled back hawkish Federal Reserve (Fed) bets, with odds of a policy rate hike in September now at 46%, down from 67% last week. The US Nonfarm Payrolls (NFP) report for July showed a decline in employment, which has weakened the US Dollar.