The rupee has rallied close to 1% to 86.10 against the dollar on the back of a sharp drop in crude oil prices after Israel-Iran ceasefire. The dollar’s wreakness globally also aided sentiment.
Forex traders cited improving risk appetite and a positive start in domestic equities as key drivers. The dollar index, which tracks the greenback against six major currencies, weakened by 0.29 per cent to 98.13, further supporting emerging market currencies like the rupee.
“Trump said overnight that a ceasefire between Israel and Iran has been done, while Iran has not confirmed it as yet. However, the market has taken this into consideration with oil falling below $70,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.
“The rupee gained to almost 86/$ levels and opened at 86.07 after the ceasefire announcement. The markets now await Fed Chief Powell’s testimony on Tuesday and Wednesday, in which he may indicate rate cuts,” he added.
Crude oil eases, easing pressure on India
Brent crude, the global oil benchmark, declined 2.73 per cent to $69.53 per barrel in futures trade. Lower crude prices have relieved pressure on India’s import bill and inflation, supporting both the rupee and bond markets.
Bond yields decline
The benchmark 10-year government bond yield dropped 3 basis points to 6.27 per cent by midday. The bond was last quoted at Rs 100.40. Falling oil prices and expectations of a stable interest rate outlook contributed to the drop.
Swaps and call money
The one-year overnight index swap rate fell by 3 basis points to 5.49 per cent, while the five-year swap rate declined 6 basis points to 5.69 per cent.
India’s overnight call money rate stood at 5.30 per cent, while the TREPS (Triparty Repo) rate was at 5.22 per cent.
Equities rebound after Monday’s fall
The rally in stocks followed a steep sell-off on Monday, during which foreign institutional investors (FIIs) offloaded equities worth Rs 1,874.38 crore. With geopolitical risks easing and global markets firming up, Indian equities bounced back strongly.
