Rupee Gains on Soft Dollar and Easing West Asia Tensions, Opens at ₹85.92 Against US Dollar

The Indian rupee strengthened against the US dollar on June 26, 2025, opening 17 paise higher at ₹85.92 compared to the previous close of ₹86.09. This marks the currency’s second consecutive session of gains, driven by a softening US dollar and easing tensions in West Asia following a tentative ceasefire between Israel and Iran. Despite the rally, the rupee remains among Asia’s worst performers this month, depreciating 0.38% since June began.

Crude Oil Retreat and Dollar Weakness Fuel Rally

The rally extends the rupee’s sharp recovery from June 24, when it posted its best single-day gain in nearly five years, surging 73 paise to ₹85.97 amid collapsing oil prices and ceasefire hopes.

Brent crude plummeted 15% over two sessions to $67.94 per barrel, while the US dollar index fell 0.45% to $97.97. This dual tailwind eased pressure on India’s import bill and attracted capital flows, offsetting earlier losses triggered by Middle East instability.

Near-Term Drivers: Fed Testimony and IPO Inflows

Market focus now shifts to upcoming US Federal Reserve Chair Jerome Powell’s testimony, where signals on potential rate cuts could influence dollar strength. Domestically, HDB Financial Services’ ₹12,500 crore IPO, India’s largest non-banking finance offering is expected to attract foreign inflows, potentially pushing the dollar-rupee below ₹86.00.

However, Analysts warn of intraday volatility, projecting a trading range of ₹85.75- ₹86.25 amid lingering geopolitical uncertainty and month-end importer dollar demand.

Conclusion: Cautious Optimism Amid Fragile Ceasefire

While the rupee’s rebound reflects improving risk sentiment, its trajectory remains tied to Middle East developments and oil price stability. The currency’s resilience against renewed ceasefire violations highlights underlying strength, but sustained gains depend on durable geopolitical de-escalation and supportive global cues. Traders will monitor Powell’s remarks and the HDB IPO’s subscription momentum for near-term direction.

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