Rupee rises by 40 paise as oil prices slide over two-week ceasefire decision

The Indian rupee extended its gains for a fourth straight session on Wednesday, strengthening against the US dollar as global markets found relief following a tentative ceasefire between the United States and Iran, easing tensions in West Asia.

The domestic currency appreciated by 0.4 per cent to 92.61 per dollar, compared with its previous close of 93, tracking a broader rebound in global equities and risk sentiment. The uptrend comes after weeks of volatility triggered by escalating conflict in the West Asia.

The shift in market mood followed an announcement by US President Donald Trump, who declared a two-week pause in hostilities with Iran, linked to the reopening of the strategically crucial Strait of Hormuz. In a post on Truth Social, Trump said he had instructed US forces to stand down, just hours after issuing stark warnings that had heightened fears of a broader conflict.

Back home, the Reserve Bank of India kept the repo rate unchanged at 5.25 per cent, signalling policy stability even as external conditions remain fluid.

Energy markets reacted sharply to the de-escalation. Oil prices, which had surged amid fears of supply disruption, reversed course dramatically. Brent crude futures fell nearly 16 per cent to an intraday low of $91.88 per barrel, while US West Texas Intermediate (WTI) crude dropped almost 20 per cent to around $91.05. The sharp correction reflected expectations that oil flows through the Strait of Hormuz — a key global supply route — would normalise.

The ceasefire, announced just hours before a potential escalation in US military action, has rekindled investor confidence after weeks of turmoil that had pushed several market indices into correction territory since the conflict began over a month ago.

However, analysts cautioned that the rally across asset classes may prove fragile. Its sustainability will depend on whether the ceasefire holds and whether energy shipments through the Strait of Hormuz resume without disruption. Concerns remain over possible violations, particularly with continued hostilities involving Israel, which could trigger renewed escalation.

Market participants noted that the rupee’s current levels are favourable for importers, though foreign portfolio investors continue to remain net sellers in Indian equities, limiting the currency’s upside.

In the commodities segment, precious metals moved higher, reflecting mixed signals in global markets. On the Multi Commodity Exchange (MCX), gold futures for June 2026 rose 2 per cent to Rs 1,53,944 per 10 gms, while silver futures for May surged 6 per cent to Rs 2,44,770 per kg, tracking gains in international bullion prices.

As geopolitical tensions momentarily ease, markets appear to be navigating a delicate balance — buoyed by optimism over diplomacy, yet wary of how quickly sentiment could reverse if the fragile truce falters.

With IANS inputs