The rupee posted its biggest single-day gain in a month on Tuesday, closing up 77 paise against the US dollar, amid a steep fall in global crude oil prices, after US President Donald Trump said in a social media post that ceasefire between Israel and Iran is in effect.

Government Securities (G-Secs) too rallied with the yield of the benchmark 10-year paper closing 6 basis points lower at 6.25 per cent (previous close: 6.31 per cent) even as its price rose by about 40 paise.

The rupee, which opened gap down at 86.11, closed at 85.9750/dollar against the previous close of 86.7450.

Intraday, the Indian unit tested a high/low of 85.9125/86.2625 per dollar.

Crude oil factor

V Rama Chandra Reddy, Head – Treasury, Karur Vysya Bank, observed that the sentiment turned positive for the rupee in the backdrop of a fall in global crude oil prices even as Trump announced a truce between Israel and Iran.

Crude oil prices, which jumped to about $82 a barrel, after Israel launched missile strikes on June 19, are currently trading at $68.

“The rupee had closed at 86.72 when the Israel-Iran war began on June 19...Trump’s comments are driving the market. The dip in crude oil is a big relief for us,” said Reddy.

Amit Pabari, MD, CR Forex Advisors, noted that following Trump’s announcement of a potential ceasefire between Israel and Iran, crude oil prices plummeted, and equities rebounded sharply. The US dollar/rupee pair traded from 86.85 to 85.95 driven by the aforementioned developments.

“Looking ahead, market participants will closely monitor two critical factors – geopolitical tensions between Israel and Iran; and expiration of Trump’s tariffs,” he said. For the rupee, Pabari sees the range to be between 85.50 and 86.90.

Vikram Kasat, Head – Advisory, PL Capital, observed that the tensions in West Asia resurfaced after Israel accused Iran of violating the ceasefire, prompting a risk-off mood globally.

“Nevertheless, oil prices extended their decline — Brent near $70 and WTI at $65 per barrel — providing relief to import-heavy economies like India. This, in turn, supported a sharp 1 per cent appreciation in the rupee to 85.93 against the dollar,” he said.

Meanwhile, India Ratings and Research (Ind-Ra) expects the current account balance (CAB) to have registered a surplus of around $7 billion (0.7 per cent of GDP) in Q4 (January-March) FY25, higher than $4.6 billion (0.5 per cent of GDP) in Q4FY24 (Q3FY25: deficit of $11.5 billion, 1.1 per cent of GDP). CAB might be in a surplus, after a gap of three quarters, in Q4FY25.

Published on June 24, 2025