The Indian rupee strengthened to around 95.4 per dollar, extending its rally for a second consecutive session to reach a two-week high, as sentiment improved on the back of easing crude oil prices and supportive comments from the Reserve Bank of India (RBI). Support for the rupee grew after Brent crude prices fell below $100 per barrel for the first time in over two weeks, amid optimism that the United States and Iran are moving closer to a peace agreement.
Market confidence was further reinforced when Sanjay Malhotra stated that the RBI would do “whatever is required” to ensure orderly movements in the foreign exchange market, noting that the rupee appears undervalued. He also highlighted that the central bank holds around $700 billion in foreign exchange reserves to help curb volatility.
However, the rupee’s gains were partly capped by persistent inflation concerns, following the fourth increase in May in petrol and diesel prices by India’s state-owned fuel retailers. The hikes are aimed at offsetting losses arising from higher costs linked to the Iran conflict.
