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Informist, Monday, May 25, 2026

By Divya Moolayattil

MUMBAI – The rupee is expected to rise sharply against the dollar Monday as crude oil prices fell below $100 a barrel for the first time in five weeks after US President Donald Trump Saturday said the US and Iran had largely negotiated terms of a peace deal that would reopen the Strait of Hormuz. "Final aspects and details of the Deal are currently being discussed, and will be announced shortly," he said in a post on Truth Social.

The rupee is likely to open around 95.45-95.55 a dollar Monday after it settled sharply higher at 95.69 Friday amid interventions from the Reserve Bank of India. The rupee is expected to move in the range of 95.00-95.90 against a dollar Monday.

The Indian unit rose 51 paise Friday. "The rupee's upward trend will continue today as global factors are positive. Oil prices are down now, below ($)100 (a barrel), which is very positive. Now, all eyes are on the peace deal and reopening of the Strait of Hormuz," a dealer at a brokerage firm said. 

At 0740 IST, Brent crude oil prices for July delivery were down 4% at $99.32 a barrel from $103.54 Friday. Investors were still cautious as US officials said the mechanism by which Iran would dispose of its highly enriched uranium was still being discussed.

Many dealers expect the Reserve Bank of India to continue to step in through dollar sales, strengthening the Indian unit further. "I think, the RBI will come in to give a boost to the rupee since the buy-sell swap is tomorrow (Tuesday). But not massively like the last few days," the dealer said. However, a few dealers said the market forces itself would help the RBI give a boost to the rupee ahead of a $5 billion dollar-rupee buy-sell swap auction. 

However, dealers expect importers to rush to buy dollars, to make the most of the appreciation of the rupee, which may limit gains for the Indian currency. Dealers expect oil marketing companies to also actively buy dollars. 

Meanwhile, Indian Oil Corp. Ltd. Monday hiked petrol and diesel prices by INR 2.61 per litre and INR 2.71 per litre, respectively, the fourth hike in 10 days amid the energy crisis stemming from the war in West Asia. Dealers said the rise in petrol prices will have very limited impact on the rupee, as it was on expected lines and priced in. "The move was expected, because right now the oil companies are at a loss of INR 35/litre," the dealer said.  

FORWARDS

The one-year dollar-rupee forward premium is expected to rise as banks may buy forward dollars on behalf of importers, noting appreciation of the rupee, dealers said. The one-year dollar-rupee forward premium fell to a one-week low on Friday. 

On an annualised basis, the premium on the one-year exact-period dollar-rupee forward contract is seen at 3.40-3.45% Monday. On Friday, it settled at 3.34%. On an absolute basis, the premium ended at 319.50 paise.

End

US$1 = INR 95.69

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Avishek Dutta

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