Pressure on the rupee and Indian government bonds is expected to continue this week as Brent crude remains above $100 a barrel and markets assess the prospect of Federal Reserve tightening. The rupee fell more than 1% last week to close at 95.55 per dollar on Friday, while Indian financial markets were closed Monday for a local holiday. Fresh strikes on Saudi energy infrastructure and attacks on ships in the Middle East have raised concerns about supply disruptions, keeping Brent crude around $105 a barrel. Markets were pricing in a high chance of a 25-basis-point Fed rate hike on Wednesday and looking for signals of further tightening, although a Reuters poll listed no change as the expected outcome. India’s August consumer inflation stood at 4.82%, strengthening the case for an interest-rate increase next month. The rupee is expected to trade between 95 and 95.80 per dollar, with record foreign-exchange reserves of $785 billion supporting expectations that the Reserve Bank of India will limit excessive volatility. Portfolio flows linked to global equity-index rebalancing and local initial public offerings, along with dollar demand from maturing non-deliverable forward contracts, are also in focus. Indian government bonds may face additional selling after the RBI announced open-market bond sales totaling 1 trillion rupees this fortnight. The benchmark 10-year yield rose for a fourth consecutive week, ending Friday at 7.0233%, up 6 basis points for the week and about 20 basis points over the previous three weeks. Traders expect a 6.98% to 7.10% range, with attention on oil, the Fed decision and the first debt sale on Thursday. The RBI will sell 500 billion rupees of bonds maturing from fiscal 2029 to fiscal 2032, followed by 250 billion rupees of sales on September 21 and September 28. Excess banking-system liquidity has pushed overnight rates below the floor of the monetary policy corridor after lenders raised $127 billion through the RBI’s special foreign-exchange mobilisation scheme. Earlier liquidity-draining operations, including a longer-tenor variable-rate reverse repo and dollar-rupee sell-buy swaps, attracted limited interest. SBI Mutual fund manager Mansi Sajeja said ineffective sterilisation of the surplus could make policy-rate recalibration ineffective. Brent remained near $105 a barrel and the 10-year U.S. Treasury yield approached 5%, as persistent inflation was expected to encourage earlier Fed tightening.