The Indian opened 4 paise weaker at 94.36 against the US dollar on Monday, 22 June, even as easing and signs of progress in US-Iran peace negotiations continued to support sentiment toward the domestic currency.
The rupee had rallied 0.8% last week to close at 94.32, marking its strongest weekly gain in nearly three months. The currency also touched a multi-month high of 94.18 and extended its winning streak to six consecutive sessions, rebounding sharply from its record low near 97 hit last month.
The recent recovery has helped improve market sentiment, reducing concerns that the rupee is locked into a prolonged depreciation trend.
Currency traders said further gains could be driven by softer oil prices and continued progress in diplomatic talks between Washington and Tehran.
Supporting the rupee, Brent crude futures for August delivery fell 1.7% to $79.24 per barrel after Iran’s Foreign Ministry indicated that discussions with the United States in Switzerland had yielded encouraging progress. The talks followed meetings between Iranian officials and US Vice President JD Vance.
Iran’s comments helped calm investor concerns that the fragile peace process could unravel after US President Donald Trump warned of potential fresh military action and Tehran once again threatened to close the Strait of Hormuz.
Oil markets have remained highly volatile in recent weeks, with Brent crude briefly climbing above $82 per barrel amid fears of renewed disruptions to global energy supplies. However, easing geopolitical tensions have since helped pull prices lower, offering relief to major oil-importing economies such as India.
RBI signals patience amid global uncertainty
According to market experts, the latest RBI Monetary Policy Committee (MPC) minutes underscore the central bank’s preference for caution as it navigates a complex global environment. RBI Governor Sanjay Malhotra indicated that uncertainties surrounding global growth, energy prices, and the progress of the monsoon warrant a measured approach rather than any hurried policy action.
Experts noted that all six MPC members appeared aligned on a “wait-and-watch” strategy, despite the central bank revising its inflation and growth projections to 5.1% and 6.6%, respectively.
“The message from the is clear — preserving stability and maintaining policy flexibility remain higher priorities than rushing into further action,” analysts said.
Foreign inflows begin responding to RBI measures
Market participants also highlighted that the RBI’s recent initiatives aimed at attracting foreign capital are beginning to yield results.
Experts pointed out that foreign inflows into India’s debt market have approached $3 billion since the beginning of June, putting the month on track to register the strongest debt inflows in nearly 15 months.
The improving flow picture has provided an important source of support for the rupee, particularly at a time when global investors continue to search for relatively stable emerging-market opportunities.
Rupee caught between supportive flows and global risks
According to currency strategists, the rupee is currently being influenced by two opposing forces. On one side, steady debt inflows and foreign currency deposits are supporting the domestic currency. On the other, lingering uncertainty in the Middle East and a resilient US dollar continue to create headwinds.
Experts believe the rupee is likely to remain range-bound in the near term, with market direction hinging on whether supportive capital flows can outweigh external geopolitical and dollar-related pressures.
“The rupee is effectively caught in a tug of war between improving domestic fundamentals and external uncertainties. Until one side gains a decisive advantage, currency movements are likely to remain measured,” analysts said.
Rupee Outlook
According to Amit Pabari, MD, CR Forex Advisors, technically, the 94.00–94.20 zone continues to act as a key support area, while 94.80–95.00 remains the immediate resistance band. With debt inflows showing signs of improvement and oil prices staying relatively contained, the bias remains mildly in favour of rupee appreciation, with USD/INR potentially drifting towards the 94.00–93.80 zone.
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