Indian Rupee extends losses as Fed tightening concerns outweigh oil price relief

The Indian rupee extended its losing streak as market attention pivoted from falling crude oil prices to the Federal Reserve's tightening cycle, with traders reassessing US rate hike probabilities after a softer-than-expected nonfarm payrolls report.

The US dollar came under pressure late last week following the NFP data, which was not weak enough to signal a recession but sufficient to trigger a slightly dovish repricing in interest rate expectations. The probability of a July rate hike now stands at just 24%, while the chances for a move in September dropped to 55%. For currency traders, this shift in Fed expectations is critical because it directly influences the dollar-rupee dynamic. A less hawkish Fed typically weakens the dollar, which could provide some relief to the rupee. However, the rupee's recent losses suggest that other factors, such as domestic inflation and capital flows, are weighing on the currency. Traders can monitor real-time price movements on NowPrice's live FX dashboard to track the rupee's reaction to evolving Fed expectations.

Looking ahead, the key event for the dollar this week is the US consumer price index (CPI) release, given the Fed's focus on inflation. Until then, the dollar may remain rangebound. Fed Governor Christopher Waller is scheduled to speak today, but unless he explicitly endorses rate hikes, price action is likely to stay subdued. For the rupee, traders will watch for any intervention signals from the Reserve Bank of India and the trajectory of oil prices, as India is a major crude importer. A sustained decline in oil prices could ease import costs and support the rupee, but the overriding driver remains the Fed's policy path.