Rupee seen opening slightly weaker as Asian peers fall; Fed decision in focus

The rupee is expected to open slightly weaker on Wednesday, taking its cue from a broad decline across most Asian currencies, as traders stay on the sidelines ahead of the U.S. Federal Reserve’s policy announcement.

In the NDF market, the Indian rupee is trading at 95.03-95.06 range, after closing 95.1150 on Tuesday.

The Indian rupee bounced back during Tuesday’s session after dipping to 95.24 intraday, helped by dollar sales from state-run banks that may have been made on behalf of the Reserve Bank of India. Market Participants view 95.30 as a key near-term support level for the currency.

Brent crude climbed 1.6% to $115.74 a barrel in Asian trading after an attack on a refinery in Saudi Arabia, the world's largest crude exporter, renewed worries about supply risks in the Middle East.

India has partly shielded the rupee from the fallout of elevated oil prices through a special RBI window that lets refiners buy dollars directly. Still, persistently high crude prices are clouding the currency's outlook and weighing on capital flows.

Markets and economists broadly expect the Federal Reserve to hold rates steady on Wednesday. But with inflation worries still dominating, investors view any pause as likely to be brief, with further rate hikes still possible.

Indian shares were poised to open lower on Wednesday as rising oil prices dented risk appetite ahead of the Federal Reserve's policy decision later in the day, with the much-awaited listing of Jio Platforms also in focus.

GIFT Nifty futures stood at 22,593, pointing to a softer start for the benchmark Nifty 50 which ended Tuesday at 22,749.75.

Foreign portfolio investors were net buyers of Indian equities worth $445.78 million on Tuesday, their biggest single-day purchase in almost two months, according to provisional NSE data.