Rupee Falls Despite Lower Oil Prices Amid Fed Rate Hike Uncertainty

The Indian Rupee (INR) has dropped against the US Dollar (USD), despite lower oil prices and the USD index trading 0.1% lower to near 99.89.

This unexpected move is attributed to the easing fears of a near-term Federal Reserve (Fed) interest rate hike, following the release of July Consumer Price Index (CPI) growth data.

The US inflation data prompted a modest dovish shift in rate expectations, with Fed funds futures trimming bets of a September rate hike to 35% from roughly 50% after the CPI print signaled cooling inflation.

Oil prices have also weakened due to OPEC's revised global oil demand growth forecast for the current year, which has led to losses in the MCX Crude Oil contract expiring on August 19.