Daijiworld Media Network – Mumbai
Mumbai, May 6: The Indian rupee appreciated by 23 paise to 94.95 against the US dollar in early trade on Wednesday, supported by a decline in global crude oil prices following indications of easing geopolitical tensions.
At the interbank foreign exchange market, the rupee opened at 95 and strengthened to an early high of 94.95, marking a gain from its previous close of 95.18. It was later trading at 95.10 against the greenback.
Forex traders attributed the recovery to a fall in Brent crude prices, which slipped to around USD 108 per barrel after US President Donald Trump hinted at progress towards a possible deal with Iran, easing concerns in the Middle East.
On Tuesday, the rupee had hit an all-time intraday low of 95.44 before settling at 95.18, amid risk aversion triggered by tensions in the Gulf region and fears of supply chain disruptions.
Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said the rupee’s rebound was also supported by positive cues from domestic equities, with Gift Nifty indicating a strong opening.
Meanwhile, the dollar index, which measures the US currency against a basket of six major currencies, declined to around 98.28, down 0.16 per cent. Asian currencies also showed strength against the dollar in early trade.
Brent crude futures were trading lower by 1.32 per cent at USD 108.42 per barrel after reports that the US had paused “Project Freedom,” an operation aimed at escorting ships through the Strait of Hormuz.
President Trump stated that “great progress” had been made towards a potential agreement with Iran, raising hopes of de-escalation in the region, which is a key route for nearly one-fifth of global oil supplies.
Market participants will continue to track geopolitical developments and crude oil price movements for further direction in the currency market.