The Indian rupee strengthened by 61 paise to close at 94.57 (provisional) against the US dollar on Wednesday, supported by a decline in Brent crude prices, which eased toward USD 100 per barrel. The fall in oil prices came after Donald Trump indicated progress in negotiations with Iran, raising hopes of a potential agreement to end ongoing tensions.
Forex traders noted that with the rupee having faced sustained pressure recently, the Reserve Bank of India is actively exploring a ‘non-direct’ approach to stabilise the currency rather than relying heavily on forex reserves.
Market sentiment also improved after Trump announced a pause in ‘Project Freedom’, a US initiative aimed at escorting ships through the strategically vital Strait of Hormuz. At the interbank foreign exchange market, the rupee opened at 95 against the US dollar, slipped to an intraday low of 95.18, and later recovered to settle at 94.57 (provisional), marking a gain of 61 paise over its previous close.
On Tuesday, the rupee had ended at 95.18 after touching a record intraday low of 95.44. The sharp fall had triggered speculation of intervention by the Reserve Bank of India, as investors pulled back from riskier assets amid renewed tensions in the Gulf region and reported attacks on infrastructure in the UAE, which reignited concerns over global supply chains.
According to Amit Pabari, Managing Director of CR Forex Advisors, the central bank is considering alternative ways to support the rupee without directly dipping into reserves. One such proposal under discussion involves encouraging state-run banks to raise funds through foreign currency bonds, potentially bringing additional dollar inflows into the system.
Also read: Sensex jumps 940 pts as oil prices decline
Trump reiterated in a Truth Social post that ‘significant progress’ had been made towards reaching a comprehensive agreement with Iran. ‘Project Freedom’, which was launched to assist ships stranded due to disruptions in the Strait of Hormuz, has now been temporarily paused to allow negotiations to proceed.
“The global mood has stabilised somewhat, though uncertainty persists. The temporary pause in ‘Project Freedom’ has helped ease extreme volatility in the markets,” Pabari added.
Meanwhile, the dollar index, which tracks the US currency against a basket of six major currencies, was down 0.66 per cent at 97.79. Brent crude prices dropped sharply by 8.25 per cent to USD 100.81 per barrel in futures trading, offering relief to oil-importing economies like India.
In domestic equities, the BSE Sensex surged 940.73 points to close at 77,958.52, while the NSE Nifty 50 jumped 298.15 points to end at 24,330.95.
Foreign Institutional Investors (FIIs) sold shares worth ₹3,621.58 crore on Tuesday, according to exchange data.
Separately, India’s services sector showed strong momentum, with growth accelerating to a five-month high in April. The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 57.5 in March to 58.8 in April, indicating the fastest expansion since November. The increase was driven by stronger new orders and output, with firms also reporting a shift from international to domestic suppliers amid the ongoing West Asia crisis.
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