The rupee gained on Friday as hopes for a US‑Iran peace deal eased oil prices. The domestic currency gained 64 paise to 95.12 against the dollar, according to Bloomberg.
Oil Deflation
Reports suggested that the US and Iran could reach a deal to reopen the Strait of Hormuz. With the growing optimism on the peace deal, oil prices cooled to under the $90 level, the level last seen in early-March. Oil prices declined 3.76% to $ 86.62 per barrel on Friday.
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“Positive developments on the peace deal lifted sentiment and eased the pressure on oil, supporting the rupee’s gains today (Friday). In addition, equity markets also favoured the currency. If the situation continues and RBI measures keep bringing in inflows, I expect the rupee to strengthen past the 94 level,” said Anil Kumar Bhansali, head of treasury, Finrex Treasury Advisors LLP.
Most emerging-market currencies gained on Friday as prospects of a prolonged geopolitical escalation reduced.
Technical Outlook
He added that a sharp rally is unlikely as the RBI will begin absorbing inflows to shrink its forward book.
In the current financial year so far, the rupee declined 5.7%. Over the past year, it has fallen 9.6%.
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“The rupee is likely to head towards the 94 level by July-end. In the near term, it should trade around 94.5–95.5 with a bias toward strengthening, driven by falling oil prices, the likely signing of the peace deal, RBI measures and a softer dollar index. For these reasons, the rupee should appreciate and the pace of any weakening will slow,” said Amit Pabari, managing director, CR Forex.
Although the peace deal proposal still needs Iranian approval and hasn’t been officially confirmed, there’s a risk the deal may fall through, added Pabari.
TOPICSRupee vs us dollarThis article was first uploaded on June twelve, twenty twenty-six, at forty-nine minutes past eleven in the night. © The Indian Express (P) Ltd