INR vs USD: Rupee Rises for Third Straight Session to 95.28 as Easing Oil Prices, US-Iran Deal Hopes Lift Sentiment 

Mumbai, May 25:The rupee strengthened to a two-week high on Monday, extending gains for a third straight session as falling crude oil prices and optimism surrounding a possible US-Iran peace agreement improved investor sentiment. 

The rupee appreciated nearly 0.4% to trade around 95.28 against the US dollar in early trade, recovering further after hitting a record low of 96.96 last week amid heightened geopolitical tensions and surging oil prices. 

Sentiment towards the local currency improved sharply after Brent crude prices tumbled more than 5% to slip below the $100-per-barrel mark on hopes of progress in negotiations between the United States and Iran over reopening the Strait of Hormuz. 

The decline in crude prices is seen as supportive for India, which imports the majority of its oil requirements, as lower energy costs help ease concerns around inflation, fiscal pressures and the country’s current account deficit.

RBI Intervention and Governor Comments Aid Recovery

Apart from softer oil prices, the rupee also drew support from comments by Reserve Bank of India Governor Sanjay Malhotra, who said the central bank would do “whatever is required” to ensure orderly movements in the foreign exchange market. 

Malhotra also indicated that the rupee appeared undervalued following its recent sharp depreciation linked to the Middle East conflict. Reports suggested the RBI may consider additional measures, including support for foreign inflows and liquidity management, if volatility persists. 

Reports said aggressive dollar-selling intervention by the RBI through state-run banks over the past few sessions had helped stabilise the currency after its prolonged slide. 

Oil Prices Remain Key Risk for Rupee

Despite the latest rebound, analysts cautioned that the rupee could remain vulnerable if tensions between Washington and Tehran escalate again or if crude oil prices resume their rally.

Market participants are closely monitoring developments around the Strait of Hormuz, a crucial global oil shipping route, as any renewed disruption could sharply raise India’s import bill and pressure the currency once more. 

Meanwhile, one-year dollar-rupee forward premiums dipped, with implied yields easing to around 3.25% as traders reassessed expectations around oil prices and RBI policy action. 

The broader improvement in global risk appetite also lifted Asian currencies and equities, while the US dollar weakened against major peers amid hopes that geopolitical tensions in West Asia may ease further.

Source:

• rates from https://www.moneycontrol.com/markets/currencies/