Rupee opens 4 paise higher at 95.08 against the dollar, Fed decision awaited

What happened

The rupee opened at 95.08 per dollar on Wednesday, up 4 paise from Tuesday's close of 95.12, as falling crude oil prices offered some relief. Investors are awaiting the US Federal Reserve's policy decision later in the day.

Confirmed

Global impact / market context

A stronger rupee makes imported goods cheaper, which helps contain inflation in a country that buys much of its oil abroad. Because markets expect the Fed to hold rates, its forward guidance, meaning its hints about future policy, will drive the dollar and emerging-market currencies.

Analyst inference

Brent crude rose 1.6 percent to $115.74 a barrel after an attack on a Saudi refinery revived Middle East supply concerns. The Reserve Bank of India's intervention and a special dollar window for oil refiners have helped contain pressure on the currency, with 95.00 seen as support.

Analyst inference

What to watch

1. The US Federal Reserve's rate decision and forward guidance due later Wednesday are key drivers for the dollar and emerging-market currencies, with markets widely expecting rates to stay unchanged. Confirmed
2. Brent crude at $115.74 a barrel could pressure the rupee if it stays high, because costly oil raises India's import bill and dollar demand from refiners. Analyst inference
3. The 95.00 level is described as an important support zone, so a break below it could signal more rupee weakness and heavier central bank intervention. Analyst inference

Evidence

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