29/05/26

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The Indian Rupee opened firmer against the US Dollar on Friday after a market holiday in India the previous day, with the USD/INR pair slipping toward 96. The currency’s gains were supported by weaker oil prices, which improved sentiment for a country that relies heavily on crude imports to meet its energy needs.

West Texas Intermediate was trading about 1% lower near $87 a barrel after touching a monthly low of $86 on Thursday. Lower energy costs generally ease pressure on India’s trade balance and reduce concerns over inflation, both of which tend to support the rupee. The drop in oil came as optimism grew around a possible US-Iran understanding that could allow more stable energy flows through the Strait of Hormuz, one of the world’s most important shipping routes.

According to reports, Washington and Tehran have reached a broad 60-day framework covering energy movement through the strait and the easing of restrictions on Iranian ports. The arrangement still requires approval from President Donald Trump, who is expected to comment in the coming days. The proposal also includes Iran’s commitment not to pursue nuclear ambitions. The prospect of progress on the deal has improved risk appetite across markets after recent tensions had lifted demand for safe-haven assets.

At the same time, foreign investors continued to pare exposure to Indian equities. On Wednesday, overseas institutions sold shares worth Rs 1,043 crore, adding to concerns that elevated oil prices and softer earnings visibility could weigh on corporate profits and government spending capacity. Global enthusiasm around artificial intelligence-related stocks has also diverted some capital away from Indian markets.

The US Dollar was also softer after giving back part of its recent advance. The Dollar Index eased from a seven-week high, though it remained near 99. The near-term direction of the greenback will likely depend on expectations for the Federal Reserve’s policy path.

From a technical perspective, USD/INR has fallen to the 20-day exponential moving average near 95.50, a level that now acts as immediate support. A close below it could open the way toward 95.00, while a recovery above 96.00 would bring the recent high near 97 back into focus.