FX.co ★ Rupee Rises to 5-Week High

The Indian rupee appreciated to around 94.7 per US dollar, extending its recovery to a five-week high as easing geopolitical tensions in the Middle East lifted investor sentiment and reduced pressure from elevated energy prices. The announcement of a US-Iran peace agreement and the reopening of the Strait of Hormuz prompted a sharp decline in crude oil prices. Market participants anticipate further rupee gains if oil prices remain stable.

Last week, the rupee came under pressure from strong dollar demand by importers, particularly oil companies. However, optimism surrounding a potential Middle East peace agreement, along with Reserve Bank of India measures aimed at encouraging foreign currency inflows, helped limit losses and provided support to the currency.

Attention now turns to the upcoming US Federal Reserve policy decision. While interest rates are widely expected to be left unchanged, investors will closely scrutinize Chair Kevin Warsh’s remarks and the updated economic and rate projections for signals on the future path of US monetary policy.