The Indian rupee surged 47 paise to close at 92.59 against the US dollar on Wednesday, buoyed by the temporary ceasefire announced between the United States and Iran and the Reserve Bank of India’s (RBI) decision to keep benchmark interest rates unchanged. Market sentiment improved as traders and investors interpreted these developments as stabilising factors amid recent volatility in currency and crude oil markets.
Forex dealers said the rupee’s rally was supported by RBI Governor Sanjay Malhotra’s assurances that recent measures in the foreign exchange market did not signal any structural policy change. Confidence was further bolstered by statements highlighting the health of the banking sector, with Malhotra noting that inspections of private lenders, including HDFC Bank, revealed no governance or conduct-related issues.
The currency opened at 92.92 per dollar in the interbank market, touched an intraday high of 92.56, and finally settled at 92.59, marking a gain of 47 paise from Tuesday’s close of 93.06. The rally coincided with global relief over the US-Iran truce, which eased fears of further disruptions to crude oil shipments through the Strait of Hormuz.
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On the policy front, the RBI’s six-member Monetary Policy Committee unanimously decided to maintain the repo rate at 5.25 per cent, retaining a neutral stance. The central bank cited elevated uncertainty following the West Asia conflict, which had previously driven up crude prices, weakened the rupee, and unsettled trade flows. The RBI also projected FY27 crude oil prices at USD 85 per barrel and a rupee-dollar rate of 94.
Global oil markets responded immediately to the ceasefire. Brent crude futures fell 13.73 per cent to USD 94.27 per barrel, reflecting optimism over the safe passage of ships through the Strait of Hormuz. Analysts noted that the announcement of a two-week suspension of US military strikes, coupled with Iran’s agreement to allow safe navigation, significantly eased geopolitical risk premiums.
Domestic equities mirrored the currency gains, with the Sensex surging 2,946.32 points to 77,562.90 and the Nifty climbing 873.70 points to 23,997.35. Despite Foreign Institutional Investors offloading equities worth Rs 8,692.11 crore on Tuesday, the market rally underscores the positive impact of improved macroeconomic sentiment following geopolitical and central bank developments.
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