Rupee Surges on Reserves and Oil Prices Ahead of US CPI Release
The Indian rupee has strengthened against the US dollar to start the week, reaching levels as low as 94.38 due to increased foreign-exchange reserves in India.
The Reserve Bank of India's (RBI) special foreign-deposits window saw strong non-resident participation, resulting in a total of over $130 billion in dollar inflows from the RBI's FCNR(B) FX measures as of August 31st.
Oil prices have also contributed to the rupee's firmness, with tensions around the Strait of Hormuz keeping crude prices elevated. The MCX September 21 crude contract rose by 1.75% to about Rs. 8,730, nearing a three-month high of Rs. 8,791.
However, the US August CPI release on Friday is expected to have a significant impact on currency volatility, with markets pricing in a 58% chance of a rate hike following last month's strong jobs report.