Mumbai, Aug 31: The Indian rupee opened on a softer note against the US dollar on Monday, pressured by higher crude oil prices, renewed geopolitical concerns and growing expectations of a US Federal Reserve rate hike in September.
The rupee opened at 95.56 per US dollar in early trade, weakening by 13 paise from its previous close of 95.43. The domestic currency had gained 2 paise in the previous session.
Forex traders said increased expectations of a September rate hike have pushed US Treasury yields higher, strengthening the dollar and weighing on emerging-market currencies, including the rupee.
“The rupee opened lower as the dollar index was at 99.62 level, while most other assets fell from their levels on Friday,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
Bhansali expects the rupee to remain largely range-bound during the session, with exporters likely to sell dollars around the 95.60 level, while importers could use dips to meet their dollar requirements.
He expects the rupee to trade between 95.25 and 95.75 during the day, with no strong directional movement likely unless global market conditions change significantly.
The US Dollar Index stood at 99.62, marginally lower by 0.07 per cent, but continued strength in US yields and expectations of tighter monetary policy remained key factors influencing currency sentiment.
Higher crude prices are another concern for the rupee because India relies heavily on imported oil. A sustained rise in crude could increase the country’s import bill and put additional pressure on the currency.
Market participants will therefore track crude oil prices, US interest-rate expectations, Treasury yields, foreign fund flows and geopolitical developments for further direction in the rupee.