Mumbai, July 27: The Indian rupee gained strength against the US dollar on Monday, rising 28 paise to trade at 96.25 in early deals, supported by declining crude oil prices, improved global market sentiment and signs of reduced tensions in West Asia.
Forex traders said the domestic currency received a boost after the United States and Iran indicated a possible easing of hostilities, reducing concerns over disruptions in global energy supplies. A weaker US dollar index and strong buying activity in Indian equity markets also helped the rupee maintain its upward momentum.
At the interbank foreign exchange market, the rupee opened at 96.18 against the greenback before settling around 96.28 during early trading hours. The movement marked a gain of 28 paise compared with its previous closing level.
The currency had already shown signs of recovery in the previous session, ending Friday at 96.53 per US dollar after recovering from weaker levels.
Dollar Weakens, Oil Prices Slide
The dollar index, which measures the performance of the US currency against a basket of six major global currencies, declined 0.26 per cent to 101.04. The fall in the dollar provided additional support to emerging market currencies, including the rupee.
Meanwhile, international crude oil prices witnessed a sharp decline. Brent crude, the global benchmark, fell 4.17 per cent to USD 92.74 per barrel in futures trading.
Market participants said expectations of a reduction in tensions between Washington and Tehran eased fears of supply disruptions from the oil-rich West Asian region. The development helped bring down crude prices, which is positive for oil-importing countries like India.
West Asia Developments Influence Markets
Analysts linked the improvement in market sentiment to diplomatic efforts between the US and Iran. US Ambassador to the United Nations Mike Waltz indicated that discussions were continuing between both sides through multiple channels.
He said negotiations had involved representatives from Oman, Iran and other stakeholders at various levels, suggesting that diplomatic engagement was being given more time.
The possibility of reduced conflict helped investors regain confidence, leading to positive movements in global financial markets.
Indian Stock Markets Support Rupee
The domestic currency also benefited from strong performance in Indian equity markets. The benchmark Sensex climbed 613.80 points, or 0.81 per cent, reaching 76,673.57, while the Nifty advanced 165.40 points, or 0.70 per cent, to 23,931.55.
The rise in domestic stocks reflected improved investor sentiment and contributed to increased demand for the rupee.
However, foreign institutional investors remained cautious. According to exchange data, overseas investors sold Indian equities worth Rs 3,892.77 crore on a net basis on Friday.
Currency Outlook Remains Linked to Global Factors
Market experts said the near term movement of the rupee will largely depend on developments in crude oil prices, global dollar trends and further updates from West Asia.
A sustained decline in energy prices could provide additional relief to the Indian currency by reducing pressure on the country’s import bill. At the same time, investors will closely monitor foreign fund flows and international economic indicators for further direction.
The rupee’s latest recovery comes amid a period of heightened global uncertainty, where geopolitical developments continue to play a major role in shaping currency movements.