The rupee strengthened by 53 paise to close at 95.05 (provisional) against the US dollar in early trade on Friday, supported by improved market sentiment following renewed optimism surrounding a possible peace understanding between the United States and Iran.
According to forex traders, the Indian currency gained ground due to a decline in global crude oil prices and weakness in the US dollar after reports suggested that Washington and Tehran had reached an understanding to extend the ceasefire for another 60 days.
Market participants said the easing geopolitical tensions helped reduce pressure on global oil markets, thereby benefiting emerging market currencies such as the rupee. On Thursday, negotiators from the US and Iran reportedly arrived at a tentative agreement to prolong the ceasefire and initiate a fresh round of discussions over Iran’s nuclear programme.
At the interbank foreign exchange market, the rupee opened at 95.77 against the American currency. During the trading session, it touched an intraday high of 94.97 and a low of 95.78. By the end of Friday’s trading session, the domestic currency settled at 95.05 (provisional), registering a gain of 53 paise compared to its previous close.
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Earlier, on Wednesday, the rupee had appreciated by 12 paise to settle at 95.58 against the US dollar. Trading activity in domestic equity and forex markets remained shut on Thursday on account of Eid-ul-Azha. Market experts said investors are closely monitoring geopolitical developments as well as movements in crude oil and the dollar index, which continue to influence the rupee’s trajectory.
“We expect the rupee to trade with a slight positive bias on renewed optimism over the peace deal between the US and Iran, pending approval from Donald Trump and the Iran supreme leader,” said Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan.
He added that softer crude oil prices and easing strength in the US dollar could further support the rupee in the near term. However, he cautioned that any fresh escalation between the US and Iran could once again put pressure on the Indian currency. According to Choudhary, the USD-INR spot price is likely to trade in the range of 94.70 to 95.60 in the short term.
Meanwhile, the dollar index, which measures the strength of the US dollar against a basket of six major global currencies, was trading at 99.13, up 0.11 per cent. Brent crude, considered the global benchmark for oil prices, declined 1.81 per cent to trade at USD 92.01 per barrel in futures trade.
Forex traders also noted that investor attention has now shifted to the upcoming meeting of the Reserve Bank of India’s Monetary Policy Committee (MPC), scheduled to be held between June 3 and June 5.
According to analysts, the central bank may either opt for a rate hike or maintain the current policy stance. However, experts believe the broader focus will remain on whether the RBI prioritises currency stability alongside inflation management amid global economic uncertainties.
On the domestic equity market front, benchmark indices ended sharply lower on Friday. The BSE Sensex plunged 1,092.06 points to settle at 74,775.74, while the NSE Nifty dropped 359.40 points to close at 23,547.75.
Foreign institutional investors (FIIs) remained net sellers in the Indian equity market, offloading shares worth Rs 1,042.70 crore on Wednesday, according to exchange data.
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