Rupee Rebounds as Crude Oil Prices Plummet
The Indian rupee gained strength against the US dollar on Tuesday, appreciating by 20 paise to close at 95.58 (provisional). The gain was driven by a sharp fall in crude oil prices due to improved global risk sentiments and hopes of diplomatic talks to resolve the US-Iran war.
Brent crude oil prices witnessed a significant decline after reports emerged that Iran would open the Strait of Hormuz within seven days if the US lifts its port blockade and eases military pressure around it. As a result, Brent crude traded lower by 1.14% at $99.20 per barrel in futures trade.
Indian rupee's gain was also supported by a decline in the US dollar index, which gauges the greenback's strength against a basket of six currencies and fell by 0.08% to 100.34. Meanwhile, foreign institutional investors (FIIs) offloaded equities worth Rs 576.20 crore on a net basis on Monday.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, noted that the rupee is expected to trade with a positive bias on improved global risk sentiments and hopes of diplomatic talks to resolve the US-Iran war. He also predicted that falling crude oil prices and a decline in the US dollar may support the rupee.