The Indian rupee recorded a sharp gain on Friday, appreciating by 53 paise to close at 95.05 against the US dollar in the interbank foreign exchange market.
The domestic currency benefited from improved global sentiment after reports suggested progress in diplomatic talks between the United States and Iran. Lower crude oil prices and a weaker US dollar also helped support the rupee during the trading session.
The rupee opened at 95.77 per dollar and moved in a wide range during the day. It touched an intraday high of 94.97 and a low of 95.78 before ending the session at 95.05, marking a strong recovery from its previous close of 95.58.
Market sentiment improved after US and Iranian negotiators reportedly reached a tentative understanding to extend the ceasefire for another 60 days. The agreement is also expected to pave the way for fresh discussions on Iran’s nuclear programme.
The development eased concerns over potential disruptions in global oil supplies. As a result, crude oil prices softened, reducing pressure on oil-importing countries such as India.
A decline in oil prices generally supports the rupee because India imports a large portion of its energy requirements. Lower import costs reduce demand for dollars and improve the country’s external balance.
Dollar Weakness And Crude Decline Help
The US dollar remained under pressure globally, further supporting emerging market currencies. The dollar index, which measures the greenback against a basket of major currencies, traded around 99.13.
Meanwhile, Brent crude oil futures fell 1.81% to $92.01 per barrel, providing additional relief to the Indian currency.
Analysts said the rupee may continue to trade with a positive bias if geopolitical tensions remain under control and oil prices stay soft.
Focus Shifts To RBI Policy Meeting
Investor attention is now turning to the upcoming Reserve Bank of India Monetary Policy Committee meeting scheduled from June 3 to June 5.
Market participants are closely watching whether the RBI opts for a rate hike or maintains current rates. Along with inflation management, the central bank’s approach towards currency stability will also be in focus.
Despite the rupee’s strong performance, broader market sentiment remained weak. The Sensex fell 1,092 points to 74,775.74, while the Nifty declined 359 points to 23,547.75. Foreign institutional investors also remained net sellers, offloading equities worth Rs 1,042.70 crore.