Mumbai, Jun 24 (PTI) The rupee rebounded from record low level and registered the steepest single-day gain in nearly five years to settle 73 paise higher at 86.05 against the US dollar on Tuesday after global crude oil prices tanked amid expectations of deescalation in Middle East tensions.
A weak greenback and firm domestic equity markets further boosted the local unit, according to forex traders.
Brent crude, the global oil benchmark, plummeted 3.19 per cent to USD 69.20 per barrel in futures trade after US President Donald Trump announced that Iran and Israel agreed to a ceasefire.
At the interbank foreign exchange, the local unit opened at 86.07 and traded in a wide range of 85.91-86.27 before closing at 86.05 against the greenback, up 73 paise from its previous close.
The rupee had plunged 23 paise to close at a five-month low of 86.78 against the US dollar on Monday.
The 73 paise surge during Tuesday’s session was matched with rupee’s previous record of the maximum single-day gain seen on September 1, 2020.
Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan, said the rupee gained on improved global risk sentiments on reports of a ceasefire between Israel and Iran.
Also, Choudhary said a sharp decline in crude oil prices and positive domestic markets favoured the rupee, while the dollar index softened amid the ceasefire reports.
Going forward, he said, traders may take cues from US consumer confidence and Federal Reserve Chair Jerome Powell’s testimony. “USD-INR spot price is expected to trade in a range of Rs 85.60-86.40.”
S&P Global Ratings on Tuesday upped India’s GDP growth forecast for the current fiscal to 6.5 per cent, citing lower crude prices, monetary easing and normal monsoon, and said the ongoing geopolitical tensions are unlikely to put a “significant pressure” on the rupee or inflation.
S&P forecasts rupee to weaken to 87.5 a dollar by the end of 2025, from 86.6 at 2024-end.
According to Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, a sharp drop in crude oil prices helped stabilise the Indian currency from its earlier lows.
“Market participants will closely watch the upcoming testimony by the Fed Chair for further cues. The rupee is expected to trade in a range of 85.75 to 86.25,” he added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.48 per cent lower at 97.94.
In the domestic equity market Sensex rose 158.32 points to settle at 82,055.11, while Nifty climbed 72.45 points to 25,044.35.
Foreign institutional investors (FIIs) offloaded equities worth Rs 5,266.01 crore on a net basis on Tuesday, according to exchange data.
