Rupee Weaker as Dollar Strengthens and Oil Prices Rise

The Indian rupee started Monday (August 31) weaker than its previous close, trading at 95.49 against the US dollar compared to Friday's (August 28) close of 95.38. The stronger dollar and higher crude oil prices continue to put pressure on the domestic currency.

One of the key concerns for the rupee is the possibility of a US Federal Reserve rate hike at its September 15-16 meeting, after Fed Chair Kevin Warsh said that inflation above 2% may necessitate a rate increase. Market expectations for a hike rose to nearly 60%, from around 35% before Warsh's comments.

Higher oil prices are also weighing on the rupee as Brent crude moved back towards $90 a barrel, increasing demand for dollars to pay for India's crude imports. The Reserve Bank of India has been intervening regularly to limit volatility and maintain stability in the market.