Rupee strengthened sharply by 58 paise to 94.60 against the US dollar in early trade on Monday, supported by a breakthrough peace agreement between the United States and Iran and a decline in global crude oil prices.
The domestic currency opened significantly stronger compared to its previous close of 95.18, as investors welcomed the easing of tensions in West Asia. Market participants said the peace deal reduced concerns over disruptions in global oil supplies, leading to a sharp fall in crude prices and improving sentiment toward emerging market currencies, including the rupee.
The agreement between the US and Iran includes the reopening of the Strait of Hormuz, a key route for global oil shipments. Following the announcement, Brent crude prices fell more than 4%, reaching their lowest levels in nearly three months. Lower oil prices are positive for India, which imports the majority of its crude oil requirements.
Currency traders said the rupee also benefited from a weaker US dollar and improved risk appetite among global investors. The dollar index slipped to a 10-day low as investors shifted towards riskier assets following the diplomatic breakthrough.
Analysts believe sustained lower oil prices could ease pressure on India’s current account deficit and inflation outlook, while also encouraging foreign capital inflows. Recent measures announced by the Reserve Bank of India to attract overseas funds have further supported sentiment in the currency market.
The positive developments also lifted Indian financial markets. Equity benchmarks Sensex and Nifty rallied strongly, while government bond yields declined as investors anticipated improved macroeconomic conditions.
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