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The Indian rupee experienced significant volatility, closing 32 paise lower at 92.83 against the US dollar, as escalating US-Iran tensions and a crucial RBI deadline for banks to curb overnight positions weighed heavily on the forex market.
Illustration: Dominic Xavier/Rediff
Key Points
- The rupee settled 32 paise lower at 92.83 against the US dollar, primarily due to risks from rising global tensions, especially the US-Iran conflict.
- High volatility was observed in the rupee as the deadline for the RBI’s instructions to banks to curb overnight positions to $100 million closed.
- The US-Iran truce remains fragile, with significant uncertainty surrounding the situation and the Strait of Hormuz remaining effectively closed.
- The Asian Development Bank (ADB) warned that a prolonged Middle East conflict could undermine India’s macroeconomic performance through higher energy prices, trade disruptions, and weaker remittance inflows.
- Despite geopolitical concerns, the ADB projected India’s GDP growth to remain robust at 6.9 per cent in the current fiscal year, rising to 7.3 per cent next year.
The rupee pared initial gains and settled for the day 32 paise lower at 92.83 against the US dollar on Friday, weighed down by risks from rising global tensions, especially the US-Iran conflict.
Forex traders said the rupee witnessed high volatility as the deadline for the RBI’s instructions to banks to curb their overnight positions to $100 million closes on Friday amid heightened geopolitical uncertainty.
Rupee’s Volatile Trading Session
At the interbank foreign exchange market, the rupee opened at 92.58 against the US dollar and hit the day’s high of 92.41, before losing ground to eventually settle at 92.83, down 32 paise from its previous close.
On Thursday, the rupee settled with a marginal gain of 3 paise at 92.51 against the US dollar.
“US-Iran truce is on shaky ground.
There is still a lot of uncertainty around how the situation will unfold. The Strait of Hormuz remains effectively closed,” IFA Global said in a research note.
Global Factors and Market Impact
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was higher by 0.03 per cent at 98.84 as the safe-haven demand has come down after the ceasefire, but as the ceasefire is fragile, the US dollar is getting bids at lower levels.
Brent crude, the global oil benchmark, was trading higher by 0.97 per cent at $96.86 per barrel in futures trade, as the ongoing uncertainty over the Strait of Hormuz opening is keeping the oil trade well bid.
US President Donald Trump is sending a delegation led by Vice President JD Vance to Islamabad for direct talks with Iran aimed at ending the West Asia conflict.
Domestic Market Performance and Economic Outlook
On the domestic equity market front, Sensex jumped 918.60 points to settle at 77,550.25, while the Nifty surged 275.50 points to 24,050.60.
Foreign Institutional Investors purchased equities worth Rs 672.09 crore on Friday, according to exchange data.
Meanwhile, the Asian Development Bank (ADB) on Friday said a prolonged conflict in the Middle East could undermine India’s macroeconomic performance through multiple channels, including higher energy prices, trade flow disruptions, and weaker remittance inflows.
In its Asian Development Outlook April 2026 report, the ADB projected India’s GDP growth to remain “robust” at 6.9 per cent in the current fiscal year, and rise to 7.3 per cent in the next, driven by strong domestic demand, and supported by easing financing conditions and lower US tariffs on Indian goods.
Background
The rupee pared initial gains and settled for the day 32 paise lower at 92.83 against the US dollar on Friday, weighed down by risks from rising global tensions, especially the US-Iran conflict.
Forex traders said the rupee witnessed high volatility as the deadline for the RBI’s instructions to banks to curb their overnight positions to $100 million closes on Friday amid heightened geopolitical uncertainty.
At the interbank foreign exchange market, the rupee opened at 92.58 against the US dollar and hit the day’s high of 92.41, before losing ground to eventually settle at 92.83, down 32 paise from its previous close.
On Thursday, the rupee settled with a marginal gain of 3 paise at 92.51 against the US dollar.
“US-Iran truce is on shaky ground. There is still a lot of uncertainty around how the situation will unfold. The Strait of Hormuz remains effectively closed,” IFA Global said in a research note.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was higher by 0.03 per cent at 98.84 as the safe-haven demand has come down after the ceasefire, but as the ceasefire is fragile, the US dollar is getting bids at lower levels.
Brent crude, the global oil benchmark, was trading higher by 0.97 per cent at $96.86 per barrel in futures trade, as the ongoing uncertainty over the Strait of Hormuz opening is keeping the oil trade well bid.
US President Donald Trump is sending a delegation led by Vice President JD Vance to Islamabad for direct talks with Iran aimed at ending the West Asia conflict.
On the domestic equity market front, Sensex jumped 918.60 points to settle at 77,550.25, while the Nifty surged 275.50 points to 24,050.60.
Foreign Institutional Investors purchased equities worth Rs 672.09 crore on Friday, according to exchange data.
Meanwhile, the Asian Development Bank (ADB) on Friday said a prolonged conflict in the Middle East could undermine India’s macroeconomic performance through multiple channels, including higher energy prices, trade flow disruptions, and weaker remittance inflows.
In its Asian Development Outlook April 2026 report, the ADB projected India’s GDP growth to remain “robust” at 6.9 per cent in the current fiscal year, and rise to 7.3 per cent in the next, driven by strong domestic demand, and supported by easing financing conditions and lower US tariffs on Indian goods.
