The Indian rupee strengthened at the open on Tuesday (March 10), rising 40 paise to 91.92 against the US dollar from the previous close of 92.32.
The gain came amid easing crude oil prices and improving global risk sentiment, which lent support to emerging market currencies.
The local unit gained after Brent crude prices dropped sharply, easing concerns about prolonged supply disruptions in West Asia.
Brent futures fell more than 10% to around $88.50 a barrel, retreating from a panic high of about $119.50 touched earlier amid escalating geopolitical tensions.
Investor sentiment improved after US President Donald Trump said in a television interview that the conflict with Iran could conclude sooner than initially expected, prompting markets to unwind some of the risk premium built into oil prices.
Lower crude prices are typically supportive for the Indian currency as India is a major importer of energy. A sustained rise in oil prices tends to widen the country’s current account deficit, stoke imported inflation and put pressure on the rupee.Market participants noted that currency dynamics often become sensitive during periods of elevated crude prices and global risk aversion.
According to Sachin Sawrikar Managing Partner Artha Bharat Investment Managers IFSC LLPhigher oil prices can pressure emerging market currencies and influence foreign portfolio investment flows, as global investors assess returns in dollar terms.
While geopolitical tensions may drive near-term volatility, domestic institutional flows and the growing financialisation of household savings have helped provide stability to Indian markets in recent years, he added.
–With Reuters inputs
