The Indian rupee strengthened sharply on Wednesday as a steep fall in global crude oil prices lifted investor sentiment and eased pressure on the domestic currency. The USD/INR pair slipped to an intra-day low of 94.31, with the rupee gaining nearly 0.8%, after reports suggested that the United States and Iran may be moving closer to a peace agreement.
The rally in the rupee came as Brent crude oil futures dropped nearly 7%, following a report by Axios that indicated progress in negotiations between the U.S. and Iran. A possible easing of tensions between the two countries helped reduce concerns in global markets, triggering a broader relief rally across Asian currencies.
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Key Highlights
- Rupee records strong gain: The Indian rupee rose nearly 0.8% against the U.S. dollar on Wednesday.
- USD/INR falls: The USD/INR pair declined to an intra-day low of 94.31 during the session.
- Oil prices drop sharply: Brent crude oil futures fell nearly 7% after reports of progress in U.S.-Iran peace talks.
- Peace deal hopes support markets: Reports suggesting that the U.S. and Iran are nearing an agreement helped ease investor caution.
- Asian currencies rally: The rupee joined a broader relief rally across Asian currencies as global risk sentiment improved.
- India benefits from lower oil prices: Since India is a major crude oil importer, a fall in oil prices usually supports the rupee and helps reduce pressure on the country’s import bill.
- Interbank offers push USD/INR lower: Reuters cited a trader who said broad-based interbank offers kept pushing the USD/INR pair lower through the trading session.
- Iran seeks fair deal: Iran has said it wants a fair and comprehensive agreement in its ongoing talks with the United States.
Overall, the rupee’s strong rise reflects how closely India’s currency is linked to global crude oil movements and geopolitical developments. With oil prices falling sharply and hopes growing for a possible U.S.-Iran peace deal, market sentiment improved significantly. However, traders are likely to keep a close watch on the final outcome of the talks, as any fresh uncertainty could again influence oil prices and currency movement.