Market News

MUMBAI, June 16 (Reuters) — The Indian rupee strengthened for a third straight session on Tuesday as investor sentiment remained supportive, while traders awaited further details of the U.S.–Iran peace agreement and guidance from the U.S. Federal Reserve.

The rupee closed 0.2% higher at 94.56 per U.S. dollar. The currency opened at 94.6125 and traded within a narrow range of around 10 paisa on either side of Friday's closing level.

The rupee touched an intraday high of 94.4950 before retreating slightly, indicating importer hedging demand at stronger levels, traders said.

"Supported by foreign inflows from the central bank measures and softer oil prices following the end of the war, the rupee is likely to appreciate toward 94 in the near term before consolidating around that level," said Mandar Pitale, Head of Treasury at SBM Bank (India).

Peace Deal Supports Sentiment

The rupee's underlying outlook improved after the U.S.–Iran peace agreement eased concerns over global energy supplies, although investors are still waiting for details of the accord.

On Monday, U.S. President Donald Trump announced that Washington and Tehran had signed a preliminary agreement to halt the conflict. However, negotiations toward a permanent ceasefire are still ongoing.

The agreement is expected to allow the reopening of the Strait of Hormuz, a crucial shipping route through which nearly one-fifth of the world's oil and liquefied natural gas supplies are transported.

Lower Oil Prices Benefit India

Oil prices eased as geopolitical tensions subsided, with benchmark Brent crude falling below $81.50 per barrel.

The decline is particularly beneficial for India, the world's third-largest importer and consumer of crude oil.

Lower oil prices are expected to:

• Reduce India's import bill;
• Ease pressure on the current account deficit;
• Lower demand for U.S. dollars from oil-marketing companies; and
• Provide support for the rupee.

Focus Turns to Federal Reserve

Market attention is now shifting to the U.S. Federal Reserve's policy decision, scheduled after Indian markets close on Wednesday.

The Fed is widely expected to leave interest rates unchanged. However, investors will closely scrutinize the central bank's updated economic projections, policy statement and comments from policymakers for signals about the future direction of U.S. interest rates.

Any indication of a more hawkish or dovish stance could influence global capital flows and emerging-market currencies, including the Indian rupee.

Reporting by Dharamraj Dhutia; Editing by Varun H. K.