Rupee Falls to 4-Week Low

The Indian rupee steadied to around 92.6 per dollar, holding recent gains as traders weighed the durability of the Middle East ceasefire and broader global risk sentiment. The currency is expected to open in the 92.70–92.80 range, supported by ongoing Reserve Bank of India measures and easing foreign equity outflows, which have helped stabilize flows. However, upside potential is seen as limited, with participants pointing to volatile crude prices, persistent importer hedging, and uneven capital inflows likely keeping the rupee confined to a narrow trading band. Global sentiment remains fragile after renewed Middle East escalation, with Donald Trump and Iranian officials diverging on the path forward and clouding prospects for talks ahead of a ceasefire deadline. Tensions rose after US forces boarded an Iranian-flagged vessel in the Gulf of Oman, the first enforcement action tied to the Strait of Hormuz blockade.

The Indian rupee strengthened to around 92.7 per dollar, extending gains from the previous session, supported by measures from the Reserve Bank of India to curb oil-related dollar demand. The central bank reportedly directed state-run oil importers to route their foreign exchange needs through a special credit facility via State Bank of India instead of the open market, reducing immediate USD demand and easing pressure on the rupee, given India’s reliance on crude oil imports. Broader measures, including tighter FX position limits for banks and restrictions on offshore-linked hedging activity, also helped curb speculative pressure and support the currency. Additionally, foreign investors turned net buyers in Indian equities, with inflows of around INR 3.8 billion helping underpin sentiment. Meanwhile, broader sentiment remained uneven, with elevated crude prices and ongoing geopolitical uncertainty in the Middle East continuing to weigh on risk appetite.

The Indian rupee hovered near 93.2 per dollar, pausing losses as easing geopolitical concerns provided support to the currency. Expectations that the US and Iran may extend their ceasefire by two weeks have reduced fears of further escalation, helping stabilize global financial markets. Even so, gains remained limited as sustained dollar demand from importers, particularly oil marketing companies, continued to cap appreciation. While softer crude prices provided some relief by easing concerns over India’s import bill, that effect was largely offset by hedging activity and steady demand for the greenback, keeping the currency confined to a narrow range. On the domestic front, investors weighed mixed macroeconomic signals, with India’s unemployment rate edging up to 5.1% in March from 4.9% in February, indicating a slight softening in labor market conditions. This was partly offset by a positive surprise in external trade, as the goods trade deficit narrowed sharply to $20.67 billion.