New Delhi: The Indian rupee opened higher against US dollar on Tuesday after US President Donald Trump announced a five-day pause of strikes on Iranian power and energy infrastructure.
The domestic currency was trading at Rs 93.64 to the dollar, as compared to the record low of Rs 93.98 to the dollar in the previous trading session.
According to analysts, the market has welcomed the five-day pause but not with conviction, and any signs of further de-escalation could pull the USD/INR lower.
On Monday, the rupee traded sharply weaker below 93.95, declining by 0.37 per cent, as escalating tensions in West Asia continue to weigh heavily on the currency.
Rising crude oil prices have significantly weakened sentiment, with India’s position as a net importer leading to higher outflows and a widening import bill.
Sustained elevated crude levels are likely to push inflation higher, which in turn may impact growth projections negatively, adding further pressure on the rupee, said analysts.
The macro backdrop remains fragile, and currency weakness is expected to persist as long as geopolitical tensions and energy prices remain elevated, said Jateen Trivedi, VP Research Analyst-Commodity and Currency, LKP Securities.
In the near term, the rupee is expected to trade within a weak range of 93.25–94.25, with sentiment likely to remain negative until any meaningful de-escalation emerges, said market watchers.
Investor sentiment was buoyed after Trump said the United States and Iran had held “very good and productive conversations” over the past two days, and that Washington would postpone any military strikes on Iranian power plants and energy infrastructure for five days.
However, Iran’s parliamentary speaker, Mohammad-Bagher Ghalibaf, denied that any talks had taken place with the US, contradicting Trump’s statement.
Analysts noted that while the rebound reflects easing geopolitical concerns, the sustainability of the rally will depend on further clarity on global developments and crude oil trends.
(IANS)
