The Indian rupee surged by 47 paise to close provisionally at 94.71 against the US dollar on Monday, propelled by a steep decline in global crude oil prices following US President Donald Trump's announcement of a finalised peace deal between the US and Iran.
Forex traders noted that the local currency's upward momentum was further accelerated by a strong rally in domestic equity markets and a weakening greenback.
At the interbank foreign exchange, the rupee opened at 94.70 against the US dollar and traded in the range of 94.45-94.77. Eventually, it settled at 94.71 (provisional), up 47 paise from its previous close.
The rupee jumped 67 paise to close at 95.18 against the greenback on Friday.
The US and Iran finalised a deal to end their 107-day war and open the Strait of Hormuz, the narrow waterway used to ferry one-fifth of the global oil supplies. The deal is expected to be signed on Friday in Switzerland.
President Trump made the announcement on Truth Social on Sunday evening, easing pressure on the global energy markets, as officials said the peace agreement would be signed on June 19 in Switzerland.
"The deal with the Islamic Republic of Iran is now complete. Congratulations to all," Trump said, adding that it would reopen the Strait of Hormuz and end the US naval blockade on Iranian ports.
Also read: Rupee surges 77 paise, settles at 95.08
"The Indian rupee rose for the second consecutive day on a rise in risk appetite in global markets amid the US-Iran deal. This led to a sharp rally in global risk assets and a fall in global crude oil prices. A decline in the US dollar and US treasury yields, too, favoured the rupee," Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, said.
"Falling crude oil price has also eased concerns over inflation. We expect the rupee to trade with a positive bias as the US-Iran deal has improved global risk sentiments," he said, adding that the USD-INR is expected to trade in a range of Rs 94.20 to Rs 94.95 on Tuesday.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.65, down 0.20 per cent.
Brent crude, the global oil benchmark, was trading lower by 4.97 per cent at USD 82.99 per barrel in futures trade.
Meanwhile, India's wholesale price inflation shot up to 9.68 per cent in May, from 8.26 per cent in April, led by a sharp spike in prices of fuel and power, manufactured and food items.
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