Rupee Rally Hits Resistance Amid Rising Oil Prices

The Indian rupee's recent rally has hit resistance near 94.50 per US dollar due to a tug-of-war between the Reserve Bank of India's support and rising oil prices and importer hedging.

Rising Brent crude prices, which are nearing $97 a barrel after jumping almost 8% last week, are increasing demand for dollars as oil is priced in US dollars.

This has offset the RBI's efforts to stabilize the rupee, with traders expecting a little-changed open near 94.48-94.50 on Tuesday.

The RBI has been active around 94.50, but its focus is more on smoothing pressure from oil and higher US Treasury yields than trying to push the rupee stronger.