The Indian rupee is set for a volatile session as it confronts a confluence of macroeconomic headwinds and geopolitical risks.
Traders returning from a long weekend face immediate pressure from higher US Treasury yields and a surge in oil prices, which threaten to undermine the currency's recent stabilization efforts.
The rupee settled at 94.9675 against the dollar on Tuesday, but market participants expect it to open in the 95.14-95.18 range on Wednesday, signaling a potential reversal of its fragile recovery.
The cross-asset pressure stems from a broader risk-off environment driven by energy market volatility.
Brent crude prices have rallied sharply, adding to import costs for India, one of the world's largest oil importers.
Simultaneously, rising US Treasury yields are attracting capital away from emerging market assets, exacerbating the rupee's depreciation pressure.