Rupee weakens to 95.56 as oil prices rise, Fed rate hike bets mount

The rupee opened weaker at 95.56 per US dollar at the interbank foreign exchange market on Monday, marking a decline of 13 paise from Friday's close of 95.43. The currency's weakness reflects multiple headwinds in global markets, including elevated crude oil prices and mounting geopolitical tensions that typically boost demand for the safer dollar asset.

Market participants have raised their probability estimates for a September rate hike by the US Federal Reserve, triggering a sharp rally in the dollar and pushing US Treasury yields higher. The stronger dollar has dampened investor sentiment across emerging markets, with the dollar index trading at 99.62 levels.

"The rupee opened lower as the dollar index strengthened, while most other assets fell from their Friday levels," said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP. Bhansali projected the rupee would trade in a range of 95.25 to 95.75, with exporters expected to sell near the 95.60 level and importers looking to buy on any dips. No directional movement is anticipated in currency pairs barring any fresh developments.