Indian rupee inches up, Iran deal longevity worries and hedging drag

MUMBAI: The Indian rupee rose modestly on Tuesday, though scepticism over the longevity of a US–Iran truce and hedging by importers checked any meaningful advance.

The Indian rupee rose 0.1% to 94.6175 against the US dollar as of 11:00 a.m. IST.

The local currency hit an intraday high of 94.53 before slipping, much like on Monday, suggesting importer hedging interest around those levels, a currency trader at a private sector bank said.

While the rupee’s underlying tone has improved following the US–Iran peace deal, uncertainty lingers over its details and durability.

Anil Bhansali, head of treasury at Finrex Treasury Advisors, said markets were awaiting details of the Iran deal, which are yet to be released.

On Monday, US President Donald Trump said Washington and Tehran had signed a preliminary agreement to halt the Gulf war, with both sides adding a permanent truce still needed to be negotiated.

The deal would extend a tenuous ceasefire announced in April by another 60 days and reopen the Strait of Hormuz, a conduit for about a fifth of world energy supplies.

Some analysts, however, expressed concerns over the deal’s longevity.

While oil prices have fallen in response, “plenty of questions remain — not least whether the deal can stand the test of time,” ING Bank said in a note.

Brent crude futures inched lower in Asian trade and were last at $82.90, hovering near their lowest level in more than three months.

India is the world’s third-largest oil importer and consumer, making lower crude prices critical for its import bill.

A sustained drop in oil prices will bolster the Reserve Bank of India’s efforts to draw foreign capital.

Meanwhile, traders awaited the US Federal Reserve’s policy decision due late on Wednesday, with the central bank widely expected to keep interest rates unchanged.