The Indian rupee bounced back sharply on May 21 after hitting a record low in the previous session. Improved global sentiment following comments by Donald Trump on possible progress in US-Iran peace negotiations helped the domestic currency recover against the US dollar.
Rupee Opens Stronger Against Dollar
The rupee recovered 61 paise to open at 96.25 against the US dollar after ending the previous session at 96.86. Earlier, the currency had touched an all-time low of 96.95 amid intense pressure from rising crude oil prices and global uncertainty.
Analysts said easing oil prices and hopes of geopolitical de-escalation supported the recovery.
Trump’s Iran Remarks Boost Market Sentiment
Donald Trump stated that ongoing negotiations with Iran were nearing a possible agreement, although he warned that the diplomatic window could close soon.
The comments improved investor confidence globally, leading to softer crude oil prices and some relief for emerging market currencies like the rupee.
Oil Prices Continue to Pressure India
Despite the recovery, crude oil prices remain elevated near $105 per barrel, significantly higher than pre-conflict levels. India imports nearly 85-90% of its crude oil requirements, making the economy highly vulnerable to oil price shocks.
Higher oil imports increase pressure on India’s trade deficit and foreign exchange reserves.
RBI Steps In to Stabilise Currency
Reports suggest the Reserve Bank of India has increased intervention in currency markets to control excessive rupee volatility. The central bank recently announced measures including a dollar-rupee swap auction to manage liquidity and stabilise forex markets.
Global Yields and Inflation Remain Concerns
Rising US Treasury yields and fears of sticky inflation continue to weigh on global markets. Investors are increasingly expecting tighter monetary policy from the US Federal Reserve, which has strengthened the dollar and pressured emerging market currencies.