Brent crude June futures dropped nearly 14% to $94.10 per barrel, easing concerns for oil-importing economies such as India. Lower oil prices tend to reduce India’s import bill and inflationary pressures, providing support to the domestic currency.
Global risk appetite improved after a two-week ceasefire agreement involving Iran, announced by Donald Trump on Tuesday. The development has eased fears of prolonged disruptions in the Strait of Hormuz, a critical global oil transit route.
Equity markets reflected the shift in sentiment. US equities rose more than 2%, while Asian markets saw sharp gains, with South Korean and Japanese stocks climbing 6% and 5%, respectively. The South Korean won led gains among Asian currencies, appreciating 1.5%, as the U.S. dollar index and Treasury yields declined.Market participants view the ceasefire as a near-term positive, reducing geopolitical risk premiums that had weighed on currencies and commodities in recent weeks.
“The ceasefire is a positive de-escalation signal for markets, especially with Hormuz reopening,” said Charu Chanana, Chief Investment Strategist at Saxo, Singapore. She added that the durability of the agreement and the pace of normalization in energy flows will be key factors going forward.
Attention now shifts to the RBI’s policy decision due later in the day. The central bank is widely expected to hold interest rates steady, as it balances growth considerations against lingering inflation risks, particularly from the earlier surge in oil prices.
-With Reuters inputs
