Rupee Jumps 58 Paise as Easing Oil Prices Lift Market Sentiment

The Indian rupee posted a strong gain against the US dollar on Monday, rising 58 paise amid a sharp decline in global crude oil prices following reports of a breakthrough peace agreement between the United States and Iran.

The domestic currency opened at 94.70 against the dollar in the interbank foreign exchange market and strengthened further to 94.60 during early trade. The rally came on the back of improving global sentiment and a significant drop in crude oil prices, a positive development for India, one of the world's largest oil importers.

The rupee had already gained momentum in the previous session, closing 67 paise stronger at 95.18 against the greenback.

Market sentiment improved after reports suggested that Washington and Tehran had reached an agreement to end hostilities and reopen the strategically important Strait of Hormuz, a key maritime route through which nearly 20 per cent of global crude oil supplies pass. The agreement is reportedly expected to be formally signed in Switzerland later this week.

US President Donald Trump announced on social media that a deal with Iran had been finalised, adding that it would pave the way for the reopening of the Strait of Hormuz and the removal of the US naval blockade.

Analysts said the sharp decline in crude oil prices significantly boosted the rupee's outlook. Lower oil prices reduce India's import costs and help narrow the current account deficit, providing support to the domestic currency.

The rupee also benefited from broader global factors, including a softer US dollar, easing US Treasury yields, and stronger risk appetite across Asian markets. These developments supported regional currencies and encouraged investor confidence.

India's retail inflation rose to 3.9 per cent in May but remained below the Reserve Bank of India's medium-term target of 4 per cent, reinforcing confidence in the country's macroeconomic stability.

Experts also pointed to recent measures by the Reserve Bank of India aimed at attracting greater dollar inflows, including the revival of a special deposit window for Non-Resident Indians (NRIs), as a supportive factor for the rupee.

However, investors are expected to keep a close watch on the upcoming US Federal Reserve policy meeting and comments from Federal Reserve Chair Kevin Warsh, which could influence expectations regarding future US interest rates and impact currency movements globally.

Meanwhile, crude oil prices witnessed a sharp correction. Brent crude, the international benchmark, fell nearly 5 per cent to around $83 per barrel, while US West Texas Intermediate (WTI) crude dropped more than 5 per cent to about $80 per barrel.

Domestic equity markets also reflected the positive sentiment, with both the Sensex and Nifty gaining more than one per cent in early trading.
 

With inputs from IANS