Indian Rupee Appreciates 53 Paise to Close at 95.05 Against US Dollar

Indian Rupee Appreciates Against US Dollar Amid Renewed Optimism Over US-Iran Peace Deal

The Indian rupee appreciated 53 paise to close at 95.05 (provisional) against the US dollar in early trade on Friday, as renewed optimism over the peace deal between the US and Iran boosted market sentiments. This appreciation comes on the back of an overnight decline in crude oil prices and a fall in the US dollar, following the US and Iran's agreement to extend the ceasefire for another 60 days.

The agreement, which was reached on Thursday, has led to a tentative understanding between the US and Iranian negotiators to extend the ceasefire by 60 days and start a new round of talks on Iran's nuclear programme. As a result, the rupee opened at 95.77 against the US dollar, touched an intraday high of 94.97, and a low of 95.78 during the day.

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At the end of Friday's trading session, the rupee was quoted at 95.05 (provisional), up 53 paise from its previous close. This appreciation is a significant improvement from Wednesday's settlement, where the rupee settled higher by 12 paise at 95.58 against the US dollar.

The domestic equity and forex markets were closed on Thursday on account of Eid-ul-Azha. However, with the renewed optimism over the US-Iran peace deal, market analysts expect the rupee to trade with a slight positive bias, pending approval from Donald Trump and the Iran supreme leader.

Anuj Choudhary, Research Analyst at Mirae Asset ShareKhan, expects the USD-INR spot price to trade in a range of 94.70 to 95.60. Choudhary also notes that softening crude oil prices and easing of the dollar may support the rupee. However, any fresh escalations between the US and Iran may pressurize the rupee at higher levels.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.13, up 0.11 per cent. Brent crude, the global oil benchmark, was trading down 1.81 per cent at USD 92.01 per barrel in futures trade.

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Attention has now shifted toward the upcoming RBI Monetary Policy Committee meeting scheduled for June 3-5. Experts expect the RBI to opt for a rate hike or a status quo decision, with the larger question being whether RBI may choose to prioritize currency stability alongside inflation management.

On the domestic equity market front, Sensex tanked 1,092.06 points to settle at 74,775.74, while the Nifty slumped 359.40 points to 23,547.75. Foreign institutional investors offloaded equities worth Rs 1,042.70 crore on a net basis on Wednesday, according to exchange data.