Rupee strengthens to 95.41 after oil cools

Mumbai: The Indian rupee gained 33 paise Tuesday amid a retreat in oil prices and dollar sales from the Reserve Bank of India (RBI), dealers said. The rupee ended at 95.41, versus its previous close of 95.74.

The currency traded in the range of 95.40 and 95.75, with state-run banks selling dollars, likely on behalf of the RBI at weaker levels, dealers said.

Brent crude oil prices slipped more than 3% to $89.2 per barrel, according to Reuters.

The rupee is expected to be between 95.25 and 95.75 Thursday. Domestic markets are closed on Wednesday for a religious holiday. "The rupee suddenly gained in the second half on positive developments on the West Asia front, though the gains were limited because we are unable to get any confirmed news," said a trader from a state-run bank.

He also noted the presence of state-run banks, on behalf of the central bank, through the first half of the trading day.

Oil prices fell because markets viewed the latest US sanctions on Iran as less disruptive to physical oil supplies than a military escalation. The measures are seen as an economic pressure campaign rather than an immediate threat to Iranian exports.

The rupee traded in a narrow 95.70-95.75 range before the news came. The currency has depreciated 0.6% so far this fiscal year.

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Dealers will now be looking at comments from Federal Reserve Chair Kevin Warsh on Friday for cues on the outlook for US interest rates.

The likelihood of future talks between Washington and Tehran also cooled yields on the benchmark 10 year bond by two basis points. The 10-year yield closed at 6.85%.