The Indian rupee continued its upward momentum against the US dollar in early trade on Tuesday, gaining nearly 15 paise to 95.89.
The strength in the rupee is being linked to several factors, including reduced crude oil prices, the cessation of hostilities between the US and Iran, and a softening of the US dollar.
According to Finrex, the rupee is expected to open stronger at 95.85 per US dollar, supported by a sharp decline in Brent crude prices to $87.10 a barrel from last week's peak of $100, following an uneasy truce between the US and Iran.
Meanwhile, the Reserve Bank of India's intervention has also strengthened the domestic currency's prospects, while much would now depend on the progress of the ongoing talks between the US and Iran.
The evolving geopolitical situation in the Middle East has improved investor risk sentiment in the market, which was also reflected in equity markets.
It is quite likely that the rupee's future direction remains linked to developments around the Strait of Hormuz, depending on how talks between the US and Iran progress in the coming days.
Indian markets are expected to stay broadly resilient to international factors; however, any fresh escalation between Iran and the United States would significantly affect the prospects of not just India but oil-dependent Asian economies as a whole.
In a volatile global market, the rupee's ability to hold its ground represents a positive sign for traders and investors as they navigate the current economic landscape.
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