Key facts
- The Indian rupee gained 65 paise against the US dollar on Friday, closing at 95.11.
- Global crude oil prices, including Brent crude, saw a sharp decline, with Brent falling to $85.80 per barrel.
- Investor sentiment improved due to optimism over potential US-Iran peace talks and the possible reopening of the Strait of Hormuz.
- Indian equity indices (Nifty and Sensex) surged over 2%, marking their largest single-day gains in over two months.
- Indian bonds also rallied, though gains were tempered by fiscal concerns.
The Indian rupee experienced a significant surge against the US dollar on Friday, closing at 95.11 after gaining 65 paise. This upward movement was primarily fueled by a substantial drop in global crude oil prices and renewed optimism surrounding potential peace talks between the United States and Iran. The decline in oil prices, which saw Brent crude futures fall to a three-month low of $85.80 per barrel, eased concerns about inflation and improved investor sentiment.
President Donald Trump's remarks hinting at a near-clinching agreement with Iran to end the conflict provided a further boost to the rupee. The potential reopening of the Strait of Hormuz, a critical oil shipping route, was seen as a significant factor that could lead to further currency appreciation. Traders noted mild intervention by the Reserve Bank of India around the 95.50 level before positive news on the peace deal supported the rupee.
This strengthening of the rupee comes after a period of depreciation, including a 2.2% slide since the start of the US-Israel war against Iran and an 11% fall in the previous financial year. Measures announced by the RBI and the government last week to attract capital inflows also contributed to stabilizing the currency. Analysts suggest that if geopolitical tensions do not escalate and a peace deal is indeed close, the rupee could appreciate further, potentially towards the 92-93 per dollar range.