Indian rupee gets a breather, contradictory signals on Iran war keep traders cautious

MUMBAI: The Indian rupee paused a three-day run of hitting record lows to nudge higher on Tuesday as traders parsed dissonant signals emanating from Washington and Tehran about a potential resolution to the conflict in the Middle East.

The Indian rupee nudged up 0.1% to end the session at 93.8650, from its close at 93.9750 in the previous session.

The currency has weakened about 4% in 2026 so far, with a large chunk of losses coming in March as oil prices surged and foreign investors yanked money from local stocks, unnerved by the war in the Middle East.

Analysts at Goldman Sachs pared growth estimates for India while markets have moved to price in monetary tightening, even as economists say some of the moves may be overstating the impact.

On Tuesday, Brent crude oil futures hovered just north of $100 per barrel, well below Monday’s $114 per barrel peak.

“We would remain cautious on the path forward especially for Asia’s currency and rates markets … even as the left tail risk of a destructive scenario has perhaps been avoided for now,” MUFG said in a note.

Indian equities and bonds benefitted from the collective relief seen in global financial markets. The benchmark Nifty 50 equity index rose nearly 2% while the yield on the 10-year benchmark bond eased slightly.

Traders are still circumspect about a sustained rebound in risk sentiment. Uncertainty lingers as the world grapples with a continuing energy shock while Iran denied that it had engaged in negotiations with the U.S.

The risk-off moves seen in March are unlikely to start unwinding meaningfully unless signs of concrete progress on a diplomatic solution to the war emerge, an FX salesperson at a foreign bank said.

On the day, the dollar index was up 0.1% at 99.3. Asian currencies traded choppy.