The rupee strengthened sharply by 65 paise to 86.13 against the US dollar in early trading on Tuesday. This rise came as crude oil prices dropped amid hopes of a ceasefire between Iran and Israel.
A weaker US dollar and a strong start in domestic equity markets also supported the rupee, forex traders said.
Brent crude, the global benchmark for oil, fell 2.73% to USD 69.53 per barrel in futures trading. This decline followed US President Donald Trump’s statement that Iran and Israel were close to agreeing on a ceasefire.
At the interbank foreign exchange, the rupee opened at 86.07 per dollar before gaining further strength to 86.13, up 65 paise from Monday’s close.
The rupee had fallen 23 paise on Monday, closing at a five-month low of 86.78 against the dollar.
“Trump announced overnight that a ceasefire between Israel and Iran has been reached, though Iran has yet to confirm it. The market reacted positively, pushing oil prices below USD 70,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP.
“Following the ceasefire news, the USD-INR pair strengthened to nearly 86.00 and opened at 86.07. Now, markets are focused on Federal Reserve Chair Jerome Powell’s testimony on Tuesday and Wednesday, where he may signal possible rate cuts to the US Senate and House,” Bhansali added.
Meanwhile, the dollar index, which measures the greenback’s strength against six major currencies, was down 0.29% at 98.13.
The domestic stock market recovered from Monday’s losses, with the Sensex rising 930.7 points to 82,827.49 and the Nifty climbing 278.95 points to 25,250.85.
However, foreign institutional investors (FIIs) sold equities worth Rs 1,874.38 crore on a net basis on Monday, according to exchange data.
