The Indian rupee appreciated by 5 paise to 95.53 against the US dollar during early trading on Friday, following an agreement between the US and Iran to extend their ceasefire for an additional 60 days.
Forex traders noted that this understanding is projected to facilitate continued trade through the strategically significant Strait of Hormuz, while negotiations regarding Iran’s nuclear program are ongoing. The rupee initially opened at 95.77 against the dollar before strengthening to 95.53 early in the session, after which it reached a low of 95.78.
On Wednesday, the rupee closed higher by 12 paise at 95.58 against the dollar. Domestic equity and forex markets were shut down on Thursday in observance of Eid-ul-Azha.
The tentative agreement between US and Iranian negotiators announced Thursday aims to prolong the ceasefire in a conflict that has persisted for three months. According to CR Forex Advisors Managing Director Amit Pabari, this development alleviates immediate concerns over potential disruptions in oil supply, helping to stabilize crude oil prices, which is beneficial for oil-importing nations like India.
The dollar index, which measures the US dollar’s performance against a basket of six other currencies, was recorded at 99.09, reflecting a 0.07 percent increase. Meanwhile, Brent crude, the global oil benchmark, fell by 1.12 percent to $92.66 per barrel in futures trading.
Traders believe that a weaker dollar and stable oil prices could provide temporary support for the rupee. However, the primary challenge remains foreign investment inflows. Since the start of 2026, foreign institutional investors (FIIs) have withdrawn nearly $24 billion from Indian equity markets. In contrast, the debt market has remained relatively stable, with approximately $1 billion in inflows.
Data from exchanges indicate that FIIs sold equities worth ₹1,042.70 crore on a net basis on Wednesday. Pabari noted that the Reserve Bank of India (RBI) has been implementing various strategies to stabilize the rupee, including liquidity operations, forex management initiatives, and measures to limit speculative trading. He added that should pressure on the currency persist, interest rates may become the next defense mechanism.
The upcoming RBI policy meeting scheduled between June 3 and June 5 is deemed critical. Pabari indicated that if global risk sentiment remains favorable and crude oil prices stay controlled, the rupee might gradually appreciate toward the 94.50–94.80 range in the near term. He suggested that any cautious signals from the RBI could bolster this recovery by enhancing investor confidence and encouraging capital flows back into the market.
Published on May 29, 2026
