Rupee falls 28 paise amid uncertainty over possible US-Iran agreement

The Indian rupee weakened by 28 paise against the US dollar in early trading on Thursday as investors reacted cautiously to reports of ongoing discussions between Washington and Tehran over a possible agreement to ease regional tensions.

The rupee opened at 94.77 against the dollar in the interbank foreign exchange market, reversing part of the gains recorded in the previous session. On Wednesday, the currency had strengthened by 69 paise to close at 94.49.

Forex traders said market sentiment turned volatile after reports emerged that the United States and Iran were working on a 14-point memorandum of understanding aimed at reducing hostilities and reviving negotiations.

Oil markets also remained sensitive to developments in the Middle East. Brent crude prices, which had briefly slipped to around USD 98 per barrel amid optimism over a potential peace deal, rose again to trade above USD 101 as investors reassessed the prospects of a breakthrough.

Analysts said persistent foreign capital outflows and geopolitical uncertainty continued to pressure the domestic currency.

According to Amit Pabari, Managing Director of CR Forex Advisors, markets were closely watching the next 48 hours, during which Washington expects a formal response from Tehran through Pakistani mediators.

The developments followed remarks by US President Donald Trump, who warned Iran of further military action if it failed to reopen the Strait of Hormuz.

A report by Axios claimed the US and Iran were nearing agreement on a brief framework document that could help end the conflict and pave the way for broader nuclear negotiations. However, officials cautioned that no final agreement had yet been reached.

Meanwhile, the dollar index, which measures the greenback against a basket of major currencies, was marginally lower at 98.01.

On the domestic equity front, benchmark indices opened lower, with the Sensex falling 160.24 points to 77,798.28 and the Nifty slipping 30.25 points to 24,300.70.

Exchange data showed that Foreign Institutional Investors sold equities worth Rs 5,834.90 crore on Wednesday.

Despite market volatility, revised Commerce Ministry figures showed India’s combined goods and services exports rose 4.6 per cent to a record USD 863.11 billion in 2025-26, compared with USD 825.26 billion in the previous fiscal year.

Merchandise exports also registered modest growth, increasing 0.93 per cent to USD 441.78 billion during the financial year.

With IANS inputs