Indian Rupee set to open higher on Monday as US Dollar corrects

The Indian Rupee (INR) is expected to open higher against the US Dollar (USD) on Monday. On Friday, Indian markets are closed for Muharram celebrations.

The USD/INR pair will likely trade lower at the open on Monday, as the US Dollar has corrected over the last two trading days, with fears of persistent global inflationary pressures waning amid lower oil prices.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.25% lower to near 101.20. The DXY has corrected from its yearly high of 101.80 posted on Wednesday.

Oil prices have returned close to pre-Middle East war levels as energy flows through the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply, have increased after the signing of a memorandum of understanding (MoU) between the United States (US) and Iran.

Rallying oil prices amid the war in the Middle East prompted inflationary pressures globally and forced traders to raise hawkish bets over major central banks.

Meanwhile, the odds of the Fed delivering at least two interest rate hikes this year have been trimmed to 41.7% from 50.2% seen a week ago.

Also, currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to perform strongly when oil prices fall sharply.