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Several global and domestic factors drove the sharp rebound.
By Anshul June 24, 2025, 9:54:49 AM IST (Published)
The rupee surged 65 paise to 86.13 against the US dollar in early trade on Tuesday (June 24), recovering from a five-month low. Several global and domestic factors drove the sharp rebound.
Factors at play
Oil prices slide
Brent crude dropped over 2% to $69.88 a barrel, easing inflation and import cost concerns. The decline followed reports of a possible ceasefire between Iran and Israel.
Oil prices had already fallen 7% on Monday (June 23) after Iran’s symbolic response to a US base strike.
Ceasefire optimism
US President Donald Trump suggested that Iran and Israel were nearing a truce. While Iran hasn’t confirmed it, markets reacted positively.
“With Trump brokering a resolution, the risk premium in oil has been re-priced,” said Chris Weston of Pepperstone.
Softer dollar
The dollar index dropped to 98.13, down 0.29%. Dovish signals from the US Federal Reserve weighed on the greenback. Vice-Chair Michelle Bowman hinted at a rate cut as early as July.
Equity market rebound
Domestic equity markets rebounded sharply. The Sensex jumped 930 points, while the Nifty rose 279 points. Foreign investors were net buyers of Indian shares, adding $1.09 billion on June 22, per NSDL data.
Technical levels in play
The rupee opened at 86.07 and moved to 86.13. Traders say levels near 86 may attract dollar-buying interest.
“Large dips in USD/INR often struggle to hold,” said a treasury official at a private bank.
Forward market signals
Offshore one-month rupee forwards stood at 86.25–86.30. Onshore forward premium was around 10.25 paise, reflecting moderate expectations of further gains.
Outlook
With oil stabilising, the dollar weakening, and equities firming, the rupee has room to strengthen. However, traders are watching Fed Chair Powell’s testimony this week for further cues on US interest rate direction.
-With PTI and Reuters inputs
