Mumbai: The Indian rupee rose 65 paise to 86.13 against the US dollar in early trading on Tuesday. This is a strong recovery after the rupee had fallen to a five-month low of 86.78 on Monday.
The main reason for this jump is the fall in global crude oil prices and hopes of a ceasefire between Iran and Israel.
Oil Prices Fall Below USD 70
Brent crude, the global oil benchmark, fell by 2.73 percent to USD 69.53 per barrel. This drop came after US President Donald Trump said that Iran and Israel were close to agreeing on a ceasefire. Although Iran has not confirmed it yet, markets reacted positively.
Lower oil prices are good for India because the country imports most of its oil. It helps reduce the trade deficit and supports the rupee.
Dollar Weakens, Markets Rebound
The US dollar index, which checks the dollar’s strength against other major currencies, dropped 0.29 percent to 98.13. A weaker dollar usually helps other currencies, including the rupee, to gain strength.
At the same time, Indian stock markets also started the day on a strong note. The Sensex rose by 930.7 points to 82,827.49, and the Nifty gained 278.95 points to 25,250.85. A strong stock market often supports the local currency.
Expert Views
Anil Kumar Bhansali from Finrex Treasury Advisors said that markets reacted to Trump’s ceasefire announcement. He also said traders are now waiting for US Fed Chair Jerome Powell’s speech to see if he hints at possible interest rate cuts.
FII and DII Activity
Even though foreign investors sold stocks worth Rs 1,874.38 crore on Monday, the overall mood remained positive due to easing geopolitical worries.
(With PTI Inputs)
