Indian rupee and US dollar currency notes (File/AFP)
Mumbai: The rupee appreciated 5 paise to 94.53 against the US dollar in early trade on Tuesday, as a sharp decline in oil prices and easing Middle East tensions have shifted the near-term bias in favour of the domestic unit. Forex traders said the immediate threat to global energy supplies has significantly reduced, following easing of tensions in the Middle East.
Brent crude fell more than 6 per cent, moving closer to the USD 82 per barrel mark. For India, which imports nearly 90 per cent of its oil requirements, lower crude prices are often like a favourable wind behind a ship supporting the rupee.
At the interbank foreign exchange market, the rupee opened at 94.69, then gained momentum and touched 94.53 in initial trade, registering a rise of 5 paise from its previous close. On Monday, the rupee strengthened 60 paise to settle at 94.58 against the US dollar. Forex traders said with oil prices moving in India’s favour and foreign inflows remaining supportive, the near-term outlook for the rupee remains positive.
“The sharp decline in oil prices and easing Middle East tensions have shifted the near-term bias in favor of the rupee. With expectations of strong foreign capital inflows and USDINR having decisively broken below the 94.80 level, the pair could gradually move towards the 94.00–93.80 zone in the coming days,” CR Forex Advisors MD Amit Pabari said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.69, higher by 0.06 per cent. Brent crude, the global oil benchmark, was trading down 0.24 per cent at USD 82.97 per barrel in futures trade. On the domestic equity market front, Sensex climbed 272.87 points to 76,537.20 in early trade, while the Nifty was up 69.15 points to 23,921.55.
Foreign institutional investors turned buyers, purchasing equities worth Rs 200.05 crore on a net basis on Monday, according to exchange data. Meanwhile, the US and Iran have finalised a deal to end their 107-day war and open the Strait of Hormuz, the narrow waterway used to ferry one-fifth of the global oil supplies, on Friday after an in-person signing of the agreement in Switzerland.
US President Donald Trump made the announcement on Truth Social on Sunday evening, easing pressure on the global energy markets, as officials said the peace agreement would be signed on June 19 in Switzerland.
Domestic developments also added support to the USD/INR pair. India’s merchandise trade deficit narrowed slightly to USD 28.21 billion in May, as stronger exports helped offset import costs despite a challenging global environment marked by volatile energy prices and trade negotiations.
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