Sentiment in currency markets was influenced by reports that Washington and Tehran had agreed to extend a ceasefire, though traders remained cautious amid repeated instances where earlier diplomatic signals failed to translate into a durable agreement.
Oil prices declined on the back of ceasefire optimism, even as remarks from US Vice President JD Vance that a deal was “close” but “not there yet” prevented a sharper fall in crude.
Brent crude futures eased, with July contracts down 1.1% at $92.6 per barrel, while the more actively traded August contracts slipped 1% to $91.7. Analysts noted that markets have already priced in a significant degree of resolution risk, limiting further downside unless a formal deal is confirmed.“Any confirmation of a deal that reopens the strait means that significant further downside is likely limited, particularly during the early stages of a ceasefire,” ING analysts said in a note.
Despite the softer oil backdrop, pressure points remain for the rupee. Traders flagged dollar outflows linked to global equity index adjustments as a near-term headwind. Elevated crude prices continue to pose macroeconomic risks for India, which imports about 80% of its energy needs, keeping Asia’s net oil importers under watch.
Positioning data also reflected caution. The rupee has fallen about 5% since the Iran conflict escalated in late February and was on track for a near 1% month-on-month decline. One-month non-deliverable forwards stood at 96.25, with the onshore forward premium at 30 paise.
The dollar index was at 99.02, while the 10-year U.S. Treasury yield held at 4.44%. Foreign portfolio investors sold a net $107.9 million worth of Indian equities on May 26, even as they bought $29.7 million in Indian bonds, according to NSDL data.
-With Reuters inputs
First Published: May 29, 2026 9:10 AM IS
