The rupee declined by 28 paise to 94.77 against the US dollar in early trading on Thursday, as market sentiment shifted following reports of discussions between the US and Iran regarding a 14-point Memorandum of Understanding (MOU) aimed at reducing tensions and reopening negotiations.
Forex traders noted that Brent oil prices, which had fallen to $98 due to the potential peace deal, rose slightly to $101 per barrel as investors reassessed the prospects for stability in the Middle East.
Ongoing foreign capital outflows amidst escalating geopolitical uncertainties further weakened investor sentiment. At the interbank foreign exchange market, the rupee opened at 94.77 against the US dollar, reflecting a decline of 28 paise from its previous close of 94.49, a day when it appreciated by 69 paise.
“Markets are currently focused on the critical 48-hour window during which the US expects Tehran’s formal response through Pakistani mediators,” stated Amit Pabari, Managing Director of CR Forex Advisors.
On Wednesday, US President Donald Trump issued a warning to Iran, threatening further military action if it does not reopen the Strait of Hormuz. This coincided with reports indicating that both countries were nearing an agreement to end the conflict.
US media outlet Axios reported that, according to official sources, the parties were close to establishing a one-page memorandum to conclude hostilities and lay out the framework for more comprehensive nuclear negotiations. The report stated that the US anticipates Iranian responses on critical issues within 48 hours, though no agreements have been finalized yet. This development marks a significant step toward a potential resolution of the war.
In market reactions, the dollar index, which measures the greenback’s strength against a basket of six currencies, was trading at 98.01, showing a slight decrease of 0.01 percent. Meanwhile, Brent crude, the global oil benchmark, saw an increase of 0.65 percent, trading at $101.83 per barrel in futures.
On the domestic front, the 30-share benchmark index Sensex fell by 160.24 points to 77,798.28 in early trade, while the Nifty index dropped by 30.25 points to 24,300.70. Foreign Institutional Investors (FIIs) had offloaded equities worth ₹5,834.90 crore on Wednesday, according to exchange data.
In terms of domestic economic indicators, India’s goods and services exports reached an all-time high of $863.11 billion for the fiscal year 2025-26, up 4.6 percent from $825.26 billion in the previous year, despite global economic headwinds. Additionally, merchandise exports saw a growth of 0.93 percent, rising to $441.78 billion from $437.70 billion in 2024-25.
Published on May 7, 2026.
