Crude oil prices retreated after US President Donald Trump said a deal with Iran could be reached soon, raising expectations of increased oil supplies and easing concerns over energy costs. Brent crude fell to around $88.80 a barrel, its lowest level in about two months.
Lower oil prices are generally positive for the rupee as India imports a large portion of its crude requirements. A sustained decline in oil prices could help reduce the country’s import bill and support the currency.
The broader market mood also improved, with Asian equities advancing, while US Treasury yields and the dollar weakened.However, analysts cautioned that investors may remain wary of pricing in a deal too aggressively. Trump has previously expressed optimism about an agreement with Iran that did not ultimately materialise, while Tehran has indicated that no final decision has been taken.
Market participants said the trajectory of oil prices will remain a key factor for the rupee. The currency has faced pressure in recent months due to elevated crude prices, prompting the Reserve Bank of India to introduce measures aimed at attracting dollar inflows and supporting the domestic currency.
Traders noted that a durable easing in oil prices and the removal of geopolitical risk premiums from crude markets could provide more lasting relief to the rupee.
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