Elevated oil prices keep up heat on rupee, traders await cues from Fed

The rupee closed at 95.2200 per dollar, compared with the previous session's close of 95.1150.

Brent oil prices climbed over 1% to $115.3 per barrel after an attack on a refinery in Saudi Arabia, the world's top crude exporter, renewed concerns about supply risks.

Qatari mediators presented Iran with a new draft deal on Sunday to end the US-Israeli war on the country, which Tehran is considering and is expected to send a response to by the end of the week, an official briefed on the negotiations said on Wednesday.

Earlier mediation ​efforts had helped produce an interim peace agreement in June, but the deal quickly unravelled.

Given the uncertainty surrounding the future path of oil prices and their potential impact on India's economy, bearish sentiment toward the rupee has intensified.

A key gauge in the options market indicates a growing skew in favour of bets on rupee weakness, compared with positions anticipating a rally in the currency.

"The direction of travel yet again seems to have turned decisively higher on the dollar-rupee," a trader at a state-run bank said.

Later in the day, the focus will turn to the Federal Reserve's monetary policy decision.

The Fed is widely expected to leave its benchmark interest rate unchanged when it announces its decision at 1800 GMT. Traders are pricing in an 84% probability of a hike in December, according to CME's FedWatch Tool.

"We suspect Chair Warsh will not want to tie himself in knots by citing a tightening in financial conditions ... Focus on restoring monetary stability should remain the dominant message and keep the dollar supported," ING said in a note.