Rupee rally: Currency rises 34 paise against dollar amid hopes of US-Iran peace deal

The rupee appreciated by 34 paise to close at 95.26 against the US dollar on Monday, marking its third consecutive session of gains, amid improving global sentiment over a possible peace agreement between the United States and Iran.According to news agency PTI, the rupee strengthened as optimism grew around easing tensions in West Asia and prospects of progress in negotiations linked to the Strait of Hormuz, a key global oil shipping route.At the interbank foreign exchange market, the rupee opened at 95.36 against the greenback and touched an intraday high of 95.12 before settling at 95.26.On Friday, the domestic currency had closed 75 paise stronger at 95.60 against the dollar.Forex traders said the rupee also received support after Sanjay Malhotra assured that the Reserve Bank of India would take necessary steps to ensure orderly movement in the foreign exchange market.“The central bank will do ‘whatever is required’ to ensure orderly price discovery in the forex market,” the RBI governor said during an interaction, as quoted by PTI.Malhotra also stated that the rupee was not overvalued and could, in fact, be undervalued after its recent depreciation.Traders also reacted positively after US President Donald Trump said the US and Iran had “largely negotiated” a peace pact aimed at ending the nearly three-month-long conflict.Trump said he had advised negotiators “not to rush into a deal” and that “both sides must take their time and get it right.”Meanwhile, US Secretary of State Marco Rubio said India and the US were close to finalising an interim trade agreement, adding to positive market sentiment.The dollar index, which measures the US currency against a basket of six major currencies, was down 0.26 per cent at 99.98.Brent crude prices also declined sharply, falling 5.10 per cent to $98.26 per barrel in futures trade.Domestic equity markets rallied strongly on Monday. The BSE Sensex surged 1,073.61 points to settle at 76,488.96, while the NSE Nifty climbed 312.40 points to close at 24,031.70.Foreign Institutional Investors (FIIs) turned net buyers during the session and purchased equities worth Rs 821.75 crore, according to exchange data.Meanwhile, India’s forex reserves fell by $8.094 billion to $688.894 billion for the week ended May 15, according to RBI data released on Friday.