The Indian rupee is likely to inch higher at Monday’s open, helped by investors dialling back bets on a Federal Reserve rate hike next month after the U.S. economy unexpectedly shed jobs last month.
The Reserve Bank of India's continued presence in the market is expected to lend further support, helping cushion the rupee from a rise in oil prices amid ongoing uncertainty over the reopening of the Strait of Hormuz.
The rupee is expected to open in the 95.14-95.16 range, per traders, having settled at 95.2075 to the dollar on Friday.
The Indian currency has been in recovery mode over the past two weeks, aided by regular RBI intervention. While oil prices remain choppy and volatile, Brent crude, quoting at $84.50 on Monday, is well below its recent high of $100, providing breathing room to the rupee.
The RBI's intervention was in focus yet again on Friday when it stepped in at the open, signalling it would not let oil-price uncertainty translate into unchecked pressure on the rupee.
That fact that the RBI is willing to intervene at current levels, too, shows that it wants to push the dollar/rupee lower, a currency trader at a bank said.
"How much further downside depends on oil and whether there is actually enough appetite to sell dollars at these levels."
OIL WOES
MARKETS RETHINK FED HIKE
Investors pared their bets on a Fed rate hike at next month's meeting after data on Friday showed employers unexpectedly shed 23,000 jobs in July. Economists polled by Reuters had expected employers to add 80,000 jobs.
Fed funds futures now imply a 44% probability of a rate hike at the Fed's September meeting, down from 55% before the data.
