Rupee also rises to 5-week high on peace deal hopes

Kolkata: The Indian rupee surged to a five-week peak and yields on the benchmark 10-year bond retreated to their lowest since mid-April during the trading session on Monday after announcements of an initial peace deal in West Asia caused oil prices to slump 5%, easing protracted pressures on the financial assets of a nation that imports four-fifths of its oil needs.

The rupee, which intraday rallied to a high of 94.45 a dollar, eventually closed 40 paise higher at 94.71 compared to the previous close, on a day when risk assets across Asia surged ahead of the anticipated peace deal between Tehran and Washington on June 19. “Based on the present market conditions and taking into account Reserve Bank of India‘s new policies to boost foreign currency inflows, we expect the rupee to trade in the range of 92.75 to 94.20 by December 2026,” veteran foreign currency consultant KN Dey said.

The currency opened the day at 94.68 a dollar with a gap of 43 paise from its Friday’s close of 95.11. The intraday low was seen at 94.78 a dollar.

Yields on the benchmark bond intraday hovered around the lowest level in two months – around 6.83% – before ending marginally higher at 6.87%. Still, yields have come off more than 15 basis points since June 3, and have consistently trended below 7% since June 4, investing.com data showed.

Traders have turned bullish on the rupee now amid the improved sentiment and expecting lumpy dollar inflows through foreign currency non-resident bank accounts.

Kotak Securities head of commodity and currency research Anindya Banerjee expects the local unit to gain to around 93/93.50 a dollar by September.