USD vs INR: The rupee strengthened by 5 paise to 94.53 against the US dollar in early trading on Tuesday, 16 June, led by a sharp fall in crude oil prices and easing geopolitical tensions in the Middle East, which improved sentiment toward the domestic currency.
According to forex market participants, concerns over disruptions to global energy supplies have eased considerably as tensions in the region have subsided.
In the interbank foreign exchange market, the rupee opened at 94.69 and advanced to 94.53 during initial trading, marking a 5-paise gain from its previous close.
The domestic currency had already posted a strong recovery on Monday, rising 60 paise to settle at 94.58 against the US dollar.
Meanwhile, the dollar index, which measures the US currency’s performance against a basket of six major currencies, edged up 0.06% to 99.69.
What’s driving the Indian currency today?
The rupee’s fortune has improved after the US–Iran peace agreement, although concerns linger around the finer details of the deal and its long-term sustainability.
On Monday, US President Donald Trump announced that Washington and Tehran had reached a preliminary pact to end the Gulf conflict. However, both nations indicated that negotiations on a permanent ceasefire are still pending. The agreement extends the fragile ceasefire declared in April by another 60 days and paves the way for the reopening of the Strait of Hormuz, a key route that handles nearly 20% of global energy shipments.
In Asian trading, Brent crude futures edged lower to around $82.90 per barrel, remaining close to their lowest levels in over three months.
As the world’s third-largest importer and consumer of oil, India stands to benefit significantly from lower crude prices, which help reduce its import costs. Continued weakness in oil prices could also support the Reserve Bank of India’s efforts to attract foreign investment flows.
At the same time, market participants are awaiting the US Federal Reserve’s policy announcement scheduled for later on Wednesday, with expectations largely pointing to an unchanged interest-rate stance.
Rupee outlook in the near term
Kaveri More, Commodity Technical Analyst at Choice Broking, said that this marginal gain reflects markets‘ cautious assessment of whether the US-Iran peace deal will endure and whether the recent dip in global crude oil prices, which has been a key driver of the rupee’s recovery over the past week, will remain sustained.
“The currency has benefited from easing West Asia tensions and softer oil prices, with the rupee recently hitting a five-week high and strengthening about 0.7% to 94.4625 per dollar on Monday; however, forward tensions persist, as the durability of the peace agreement and oil price trajectory will critically determine whether this near-term strength can translate into a more durable uptrend,” More said.
On the technical outlook, Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said that the rupee has now moved into an important resistance zone near 94.80–94.00.
“Support is seen around 95.00, and if positive developments around the Strait of Hormuz continue, a sustained move below 94.80 could pave the way for further appreciation towards 94.00 and potentially 93.50 in the coming weeks. Market participants will continue to monitor geopolitical developments, crude oil prices, and foreign fund flows for the next directional move,” Trivedi said.
(With inputs from agencies)
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