Rupee Weakens as Brent Crude Nears $88 Barrel

The Indian rupee is expected to open weaker on Tuesday, trading around 95.35-95.40 per US dollar as Brent crude nears $88 a barrel.

The rupee has been stuck in a tight range of 95.10-95.30 for days, with importers and hedgers needing dollars at current levels while the Reserve Bank of India (RBI) sells dollars to keep the market from getting disorderly.

One trader told Reuters that without the RBI's support, USD/INR would be 'well past 95.50'. The timing is crucial because India imports most of its oil, and when crude prices jump, companies buy more dollars to pay for shipments and lock in future costs, putting pressure on the rupee.

The higher US Treasury yields, which have risen to around 4.70%, also raise the return on dollar assets, drawing global money towards the US and adding pressure on emerging-market currencies like the rupee.