Rupee hits five-week high, ends at 94.71 vs USD on easing Mideast tensions

The Indian rupee surged 40 paise Monday to close at 94.71 against the dollar in its sharpest single-day gain in recent months, as news of the West Asia conflict ending triggered a broad-based rally in local markets.

The currency opened the day at 94.68 a dollar with a gap of 43 paise from its Friday's close of 95.11. It rallied to a five-week high of 94.45 a dollar during the day, tracking the fall in global oil prices as the US and Iran are likely to ink a peace agreement, scheduled on June 19. The intra-day low was seen at 94.78 a dollar.

Traders have turned bullish on the rupee now amid the improved sentiment and expect lumpy dollar inflows through foreign currency non-resident bank accounts.


Kotak Securities head of commodity and currency research Anindya Banerjee expects the local unit to gain to around 93/93.50 a dollar by September.

"Based on the present market conditions and taking into account Reserve Bank of India's new policies to boost foreign currency inflows, we expect the rupee to trade in the range of 92.75 to 94.20 by December 2026," veteran foreign currency consultant KN Dey said.

The local unit saw its record low of 96.96 last month, driven by the elevated energy prices. At Monday's closing level, the local unit was 5.6% down this year.

"Sustained dollar inflows into the debt market—driven by recent government and RBI measures—along with improving global risk appetite, provided further support to the domestic currency," said Nandish Shah, deputy vice president with HDFC Securities.

The Brent crude price declined nearly 5% to around $82.9 a barrel, its lowest level since March, providing relief to India's inflation outlook and external balances.

"This sharp cooling in energy costs has effectively squashed immediate sticky inflation fears, clearing a smooth path for global central banks to pivot toward early interest rate cuts," said Vikram Kasat, head of advisory at PL Capital.