The rupee has risen 41 paise to 94.70 against the US dollar in early trade amid positive developments between the United States and Iran. The easing of geopolitical tensions between Tehran and Washington has raised hopes among investors, who are now looking to invest in broader markets rather than in the energy and defence sectors.
Meanwhile, higher CPI inflation at 3.9 per cent remains a key factor for future RBI policy decisions.
The rupee had come under immense pressure since February 28 when the US and Israel launched a joint military operation against Iran, triggering a full-scale war.
In response, the Iranian side closed the global chokepoint Strait of Hormuz and banned all shipping from using the strategically important waterway.
This triggered crude oil shortages in Asia, severely hampering major developed and developing economies on the continent.
The rupee came under immense pressure in May and June when it dropped to a record low against the US dollar.
The Reserve Bank of India has poured billions of dollars into the economy to stabilise the falling currency.
As a final resort, the Indian government led by Prime Minister Narendra Modi announced austerity measures to control the outflow of dollars and stabilise the economy.
Since then, the rupee has gained some strength but still remains below the levels seen before the war between the US and Iran broke out.
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