Rupee Rises on Renewed Optimism for US-Iran Ceasefire
Indian Rupee Opens Higher Amid Hopes of Easing Geopolitical Tensions
The Indian rupee opened higher on May 29 following reports that the United States and Iran have agreed to extend their ceasefire, raising hopes of easing geopolitical tensions and softer crude oil prices. However, traders remained cautious as several similar developments in recent weeks have failed to deliver a lasting resolution.
According to market analysts, the rupee opened higher by 12 paise at 95.57 per dollar on Friday against Wednesday's close of 95.69. This development comes after the rupee had fallen to below 96 after reports of fresh attacks by the US over Iran, but reports of a deal between the two countries for a period of 60 days with reportedly opening of the Strait of Hormuz brought the rupee to 95.82 levels. However, nothing is confirmed as Iran has not confirmed the contents of the deal as yet.
The rupee remains vulnerable to any rise in oil prices due to the Iran war. Exporters are again getting a chance to sell their near-term exports while importers need to wait to hedge their imports though the dips can be bought for the cash/very near-term imports. The range for the day can be expected between 95.25 to 96.25, with all eyes on the Iran-US peace deal as also RBI's reaction to any weakness in the rupee.
Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data
Global Currencies Weaken Amid Iran-US Ceasefire Agreement
The dollar extended its weakness against major currencies on Friday and was on track to end the week lower, after reports the U.S. and Iran reached an agreement to extend the ceasefire in the Middle East and lift restrictions on shipping through the Strait of Hormuz. Most of Asian currencies weakened slightly, with the South Korean Won recording the biggest decline among the listed currencies, falling 0.427%. The Indonesian Rupiah also declined, down by 0.252%.
| Currency | Change |
|---|---|
| South Korean Won | -0.427% |
| Indonesian Rupiah | -0.252% |
| Japanese Yen | -0.019% |
| Singapore Dollar | -0.016% |
| Philippines Peso | +0.353% |
| Malaysian Ringgit | +0.351% |
| Thai Baht | +0.258% |
| Taiwan Dollar | +0.102% |
| China Renminbi | +0.053% |
On the positive side, the Philippines Peso gained the most, rising 0.353%, followed by the Malaysian Ringgit, which is appreciated by 0.351%. The Thai Baht advanced 0.258%, while the Taiwan Dollar and China Renminbi posted modest gains of 0.102% and 0.053% respectively.
Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline
Investor Takeaway
The Indian rupee may continue to rise on renewed optimism for a US-Iran ceasefire, but traders remain cautious due to previous failed developments.
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