Rupee Falls as Hawkish Fed Expectations and Oil Price Decline Weigh In
The Indian Rupee has come under pressure against the US Dollar in early trading sessions on Wednesday. The USD/INR pair is up marginally to near 95.62, as the US Dollar outperforms due to firm expectations that the Federal Reserve will extend its monetary tightening cycle for the remainder of the year.
FedWatch tool shows traders see an almost 90% chance that the Fed will deliver at least one more interest rate hike this year. Analysts at MUFG note that these rate expectations are supported by hawkish comments from regional Fed presidents, including Chicago Fed President Austan Goolsbee and Richmond Fed Bank President Thomas Barkin.
Oil prices continue to remain under pressure on hopes of diplomacy between the United States and Iran. Lower oil prices bode well for currencies from economies that rely heavily on oil imports, such as India.