New Delhi — The Indian rupee strengthened by 58 paise against the U.S. dollar on Monday as global crude oil prices fell sharply after U.S. President Donald Trump announced that Washington and Tehran had finalized a peace agreement and agreed to reopen the Strait of Hormuz.
The rupee opened at 94.70 against the dollar in the interbank foreign exchange market and later rose to 94.60, gaining 58 paise from its previous close. In the previous session, the currency had settled 67 paise higher at 95.18 against the dollar.
The United States and Iran have reached an agreement to end the war and reopen the Strait of Hormuz, the strategic waterway through which nearly one-fifth of the world’s crude oil supplies are transported. Reports said the agreement is expected to be formally signed in Switzerland later this week.
On Truth Social, Trump said, “The Deal with the Islamic Republic of Iran is now complete. Congratulations to all.”
He said the agreement would allow the Strait of Hormuz to reopen and lead to the removal of the U.S. naval blockade.
Analysts said the rupee gained support from the sharp fall in crude oil prices following reports of the U.S.-Iran peace agreement. Lower oil prices are positive for India, a major crude importer, because they help reduce the country’s import bill and ease pressure on the current account deficit.
Softer dollar sentiment, lower U.S. Treasury yields and improved risk appetite across Asian markets also supported regional currencies, including the rupee, analysts said. India’s inflation rose to 3.9 percent in May but remained below the Reserve Bank of India’s 4 percent target, adding to macroeconomic stability.
Analysts also said the RBI’s recent steps to attract dollar inflows, including the revival of an NRI deposit window, could provide further support to the domestic currency.
However, traders are expected to closely track the upcoming Federal Reserve policy decision and comments from Chair Kevin Warsh for signals on the future path of U.S. interest rates, which could influence the rupee’s near-term movement.
Brent crude, the global oil benchmark, fell nearly 5 percent to $83 per barrel, while U.S. West Texas Intermediate crude dropped more than 5 percent to $80.
Domestic equities also saw strong buying interest, with the Sensex and Nifty gaining more than 1 percent in early trade. (Source: IANS)
