The Indian rupee strengthened by 14 paise to close at 94.36 against the US dollar on Thursday, driven by positive market sentiment following a diplomatic breakthrough between the United States and Iran.
Market Sentiment Boosted by US-Iran Agreement
Forex traders noted that market sentiment was buoyant after the United States and Iran electronically signed a memorandum of understanding aimed at ending hostilities and creating a framework for negotiations on Iran's nuclear programme. The agreement eased geopolitical tensions, which had been weighing on global markets.
Rupee Performance
The rupee opened stronger and maintained its gains throughout the session, closing 14 paise higher than the previous close. The domestic currency had been under pressure in recent weeks due to concerns over rising crude oil prices and global uncertainties.
Impact on Forex Markets
The positive development boosted risk appetite among investors, leading to inflows into emerging market currencies. The dollar index, which measures the greenback against a basket of six major currencies, also softened, providing further support to the rupee.
Outlook
Analysts expect the rupee to trade in a range of 94.00 to 94.80 against the dollar in the near term, with further gains possible if the US-Iran talks progress. However, any reversal in global risk appetite or a spike in oil prices could limit the upside.
