However, gains remained limited as persistent dollar demand from importers and companies with overseas borrowings offset optimism around a potential Iran ceasefire.
Currency traders said intraday movement in the rupee has stayed narrow in recent sessions, typically within a 30–35 paise range, reflecting subdued directional momentum.
Market volatility has also eased in recent days. One-month implied volatility has declined to about 4.9%, down from levels above 8% during earlier concerns linked to geopolitical tensions and policy-related uncertainty following recent Reserve Bank of India actions.
Sentiment improved after reports of a possible Iran ceasefire and a decline in oil prices, which supported risk appetite across Asian markets. Hopes of reduced tensions in West Asia also contributed to a pullback in crude, with expectations that Iran could allow greater shipping access through the Strait of Hormuz.
Despite the improvement in global risk sentiment, bankers said the rupee’s upside remains capped. Ongoing hedging demand from importers and corporates continues to provide support for dollar demand, limiting appreciation.
Traders expect the currency to remain range-bound in the near term. One spot FX trader at a private sector bank pegged the likely trading range at 92.80–94 for the rest of the month.
Asian equities traded higher on optimism around a potential resolution to the Iran conflict, while oil prices eased slightly on expectations of easing geopolitical tensions. The White House also signalled optimism about a possible agreement, even as it warned of increased economic pressure on Iran if talks stall.
–With Reuters inputs
