The Indian rupee extended its winning streak for a third consecutive session on Tuesday, ticking up by 5 paise to close provisionally at 94.53 against the US dollar. This upward momentum was heavily supported by receding geopolitical frictions in West Asia along with a prolonged slump in global crude oil prices.
According to forex market analysts, the immediate risks threatening global energy supplies have dropped significantly following a de-escalation in the US-Iran conflict and fresh diplomatic progress regarding the strategic Strait of Hormuz.
Additionally, a broader softening of the greenback and a decline in US treasury yields provided a favorable tailwind for the USD/ INR currency pair.
At the interbank foreign exchange, the rupee opened at 94.69 against the US dollar and traded in the range of 94.48-94.71. Eventually, it settled at 94.53 (provisional), up 5 paise from its previous close.
"We expect the rupee to trade with a positive bias as global markets cheer the US-Iran deal, which has boosted global risk sentiments. Declining US dollar and falling crude oil prices may further support the rupee.
"Easing inflation concerns and expectations of fresh foreign inflows may also support the rupee. USDINR spot price is expected to trade in a range of 94.10 to 94.90," said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.
Also read: Rupee gains 47 paise, closes at 94.71 per US dollar
On Monday, the rupee strengthened by 60 paise to settle at 94.58 against the US dollar.
In the past three trading sessions, the USD/INR pair has gained 132 paise against the US dollar.
Forex traders said with oil prices moving in India's favour and foreign inflows remaining supportive, the near-term outlook for the rupee remains positive.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.61, lower by 0.01 per cent.
Brent crude, the global oil benchmark, was trading down 1.68 per cent at USD 81.77 per barrel in futures trade.
"For India, which imports nearly 90 per cent of its oil requirements, lower crude prices are often like a favourable wind behind a ship supporting the rupee," CR Forex Advisors MD Amit Pabari said.
Meanwhile, US Vice President JD Vance will lead the US delegation for the in-person signing of the peace deal with Iran in Switzerland on Friday, President Donald Trump said.
Both Trump and Vance have electronically signed the framework agreement with Iran's lead negotiator Mohammad Bagher Ghalibaf, according to a senior US official quoted by The New York Times.
The Strait of Hormuz, located between Iran and Oman, is considered one of the world's most important energy chokepoints, carrying a substantial share of global oil and liquefied natural gas exports.
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