CURRENCY OVERVIEW

The Indian rupee weakens past the 96 per dollar mark on ‌Tuesday to touch a two-month low as oil prices continued to climb, deepening investor worries about the impact on the net energy-importing economy. The rupee declined to 96.1450 per dollar, down nearly 0.2% on the day. Rising oil prices have pressured Indian equities and bonds, with foreign investors pulling out $3.7 billion so far in September, deepening pressure on the rupee. India’s central bank may be reluctant to see the rupee break past the psychologically important 96-per-dollar mark and could intensify its intervention, having been a near-daily presence in the market in recent weeks. Reserve Bank of India has higher firepower following the recent build-up in foreign exchange reserves from inflows linked to special measures it has introduced. The rupee has been under persistent pressure from the stubbornly high oil prices, while a jump in US yields and a hawkish repricing of Federal Reserve policy expectations have compounded the strain. The dollar index is trading near a two-month high. The dollar hovered near a two-month high on Tuesday as volatile oil prices and a rapid climb in Treasury yields lent support, although ‌gains were limited as traders awaited US data this week for clues on the Federal Reserve's rate path. The dollar index was a touch higher at 101.2 and on track for a 1.8% advance this month, its best performance since June. The dollar is making limited gains for now as investors awaited US data later in the week, while markets have gradually grown desensitized to oil moves and a global bond sell-off has neutralized the boost to the dollar from higher Treasury yields. The euro traded near its weakest level in three months at $1.1367 after the European Central Bank's chief signaled measured steps to quell inflation. Sterling was steady at $1.3248, also not far from a three-month trough. The Japanese yen weakened a touch to 157.40 per dollar, giving back a chunk of Monday's gain after Japan's top currency diplomat Atsushi Mimura said markets should heed the "very clear" warning Tokyo and Washington delivered last week on the yen, leaving traders on edge over the risk of intervention. Oil prices rose for a second successive session on Tuesday as lingering concern over Middle East supply disruption brought about by US-Iran conflict outweighed signs of recovering crude exports ‌from the region. Brent crude futures had risen $1.49, or 1.4%, to $106.77 a barrel by 0326 GMT while US West Texas Intermediate crude was at $93.94, up $1.34, or 1.5%. Both benchmarks closed the previous session at nearly $1 a barrel higher. Gold steadied on Tuesday but hovered at a more than ‌seven-week low on concerns that the Federal Reserve may keep interest rates higher for longer, while investors awaited a slew of US economic data. Spot gold was little changed at $4,124.57 per ounce, as of 0140 GMT, after hitting its lowest level since August 5 in the previous session. US gold futures fell 0.3% to $4,156.70. Geopolitical developments will remain crucial ?for gold, as continued tensions could keep energy prices and yields elevated, while meaningful progress towards de-escalation could ease pressure. Among other metals, spot silver fell 0.6% to $60.62, platinum slipped 1% at $1,699.86 and palladium lost 0.5% to $1,209.08.