Rupee Weakens as Oil Prices Rise Ahead of US Inflation Data

The Indian rupee weakened from its two-month high as oil prices rose and investors awaited US inflation data on Friday. The USD/INR pair rebounded to about 94.75 after touching a low of 94.29 last week, despite the US Dollar Index (DXY) falling 0.1% to around 98.80.

The MCX Crude Oil September 21 contract surged 0.6% to Rs. 8,818, its highest level since May 22, putting pressure on the rupee due to India's heavy dependence on imported oil. Brent crude prices are nearing their July peak near $102 per barrel and may target levels of $108 or $117 if they break through.

Market attention is focused on this week's US Consumer Price Index (CPI) data, which could influence the Federal Reserve's interest rate decisions. The CME FedWatch tool indicates a 58.4% chance of a rate hike next month.