The Indian rupee opens marginally weaker on Wednesday, tracking losses across most Asian peers, with investors awaiting the Federal Reserve's policy decision after local market hours for clues on the outlook for further rate hikes. The rupee managed to recover in Tuesday's session after slipping to 95.24 intraday amid dollar sales by state-run banks which two traders said may be on behalf of the Reserve Bank of India. Traders see 95.30 as a key near-term support level for the Indian currency. The rupee's resilience despite surging oil prices points to the increased role of the RBI's intervention in containing pressure on the currency, with the exchange rate largely range-bound around the 95-per-dollar mark. India has partly cushioned the rupee from the impact of elevated oil prices through a special RBI window for refiners to purchase dollars directly. However, persistently high oil prices are clouding the rupee's outlook and weighing on capital flows. Markets and economists widely expect the Federal Reserve to leave rates unchanged on Wednesday. However, with inflation concerns still front and centre, investors see any pause as likely to be short-lived, with further rate hikes remaining on the table. The US dollar held at a two-week high on Wednesday ahead of policy decisions from central banks, with the Federal Reserve widely expected to leave its policy interest rate unchanged while signalling the probability of any December move. Most of the dollar's peers were unmoved ahead of the Fed decision. The euro was flat at $1.1129, as was the British pound at $1.3307. Against the yen , the dollar oscillated between gain and loss and was last 0.1% weaker at 157.81 yen. In the US, traders broadly expect no change in central bank policy. Fed funds futures are pricing an implied 91% probability the Federal Open Market Committee will keep its policy interest rate on hold. The US dollar index , which measures the greenback's strength against six currencies, rose 0.3% on Tuesday to 102.40, its highest since October 14. The yield on the US 10-year Treasury bond was unchanged at 4.9967%. Oil prices rose on Wednesday after an attack on a refinery in Saudi Arabia, the world's biggest crude exporter, renewed concerns around the risks to supply in the Middle East stemming from the conflict with Iran and its proxies. Brent crude futures rose $1.48, or 1.3%, to $115.36 a barrel as of 0140 GMT. US West Texas Intermediate crude rose $1.22 or 1.22% to $101.12. Prices were swinging back after dropping nearly $2 on Tuesday as talks in the Middle East helped ease supply worries. That was despite data expected to show a rise in crude inventories in the US. Crude oil stockpiles rose by about 15,000 barrels in the week ended October 23. Crude oil exports from Russia's Baltic and Black Sea ports could fall next month as domestic refiners increase diesel output following a deal with Washington this month.
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The euro rebounded on Tuesday and was on pace for its strongest move higher in a month after falling to its lowest in 17 months in the prior day, as a pullback in French government bond yields cooled fears about strain in euro zone debt markets. The euro zone's currency climbed 0.28%, on track for its biggest daily gain since September 3, at $1.1252. the currency had slid to its lowest since May 2025 on Monday at $1.116, following a drop of more than 1% in the prior week, its fourth straight weekly decline. The dollar index , which measures the greenback against a basket of currencies, fell 0.26% to 101.89 and was on pace for its biggest daily drop since September 25. Bond markets around the world have seen yields rise due to expectations of sharp central bank rate hikes as energy prices have jumped due to the US-Israeli war with Iran and fanned inflation, as well as concerns about government finances. France is at the heart of the European market concerns. The French government is seeking to enact an unpopular 2027 budget to lower its deficit and contain its record-high debt load, a tall order in a deeply divided parliament as political factions position ahead of next year's presidential election. With inflation already rising on soaring energy costs and higher yields increasing household and corporate borrowing costs, further euro weakening could leave the European Central Bank caught between fighting inflation and calming bond markets.
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