Rupee may inch up on
Monday, with oil prices softening after Iran highlighted
progress in peace negotiations with the United States.
The rupee rose 0.8% last week to settle at 94.32,
its best weekly performance in nearly three months. It hit a
multi-month high of 94.18 and is now on a six-session winning
streak, recovering notably from last month’s all-time low near
97.
The recovery has shifted underlying sentiment on the
currency, easing the perception that it is on a sustained
depreciation path.
A further fall in oil prices and positive developments in U.S.-Iran negotiations could lend further support, traders said.
Brent crude for August delivery fell 1.7% to $79.24 on Monday
after Iran’s foreign ministry spokesperson said good progress
was made during talks in Switzerland following talks with U.S.
Vice President JD Vance.
Iran’s comments helped mollify markets that had been concerned
that the tentative peace deal could unravel after U.S. President
Donald Trump warned of fresh attacks and Tehran moved to once
again shut the Strait of Hormuz.
Oil prices mirrored the volatility, once climbing past $82 on
concerns over the deal.
Asian currencies traded mixed, while the dollar index was
little changed just below 101. The 10-year U.S. Treasury yield
edged higher, though it remained off recent peaks.
The backdrop for the rupee is positive for now, although not in
a way that suggests a major rally, a currency trader at a bank
said.
Levels around 94 are possible this week, not much beyond
that, he added.