Rupee jumps 36 paise to open at 92.64 per dollar as crude oil prices crash amid US-Iran ceasefire; RBI policy in focus(AFP)AI Quick ReadThe rupee rose by 36 paise to open at 92.64 per dollar on Wednesday, April 8, in anticipation of the central bank's policy announcement, supported by falling oil prices and a surge in Asian currencies following a two-week ceasefire in the Middle East.
Brent crude futures for June dropped nearly 14% to $94.10 per barrel, US stocks jumped over 2%, while South Korean and Japanese markets increased by 6% and 5%, respectively.
A two-week ceasefire with Iran, brokered by US President Donald Trump on Tuesday, April 7, strengthened risk assets, boosted Asian currencies, and contributed to the decline in oil prices.
The ceasefire will provide significant relief for markets, which in recent weeks have been faced with uncertainty regarding the duration of the conflict and its potential effects on inflation.
The accord was finalized just under two hours prior to Trump's ultimatum for Tehran to reopen the Strait of Hormuz, or else confront what he described as severe strikes on its civilian infrastructure.
According to experts, the news of the ceasefire is positive for oil-importing India, especially with the Reserve Bank of India's policy announcement scheduled for 10 IST. The central bank is largely anticipated to maintain its current interest rates, as the recent surge in oil prices has raised inflation worries. To address the impact of rising oil prices on the rupee, the RBI has recently imposed stricter regulations on the operations of banks and corporations.
After implementing these measures, the rupee has bounced back from levels close to 95 per dollar, and the easing from the ceasefire is expected to further bolster it.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that rupee will strengthen and this may even force the FPIs to turn buyers; at least they will have to cease the sustained selling, which will become irrational in the present context.
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