The rupee rose against the US dollar for a second straight session on Monday, helped by a sharp decline in crude oil prices after a preliminary US-Iran agreement to end the conflict and reopen the Strait of Hormuz, Reuters reported.The currency also extended gains seen after the Reserve Bank of India’s June 5 measures to attract dollar inflows, when the central bank left interest rates unchanged and retained its “neutral” policy stance.The rupee settled at 94.71 against the dollar, up 0.4% from the previous close of 95.11. During the session, it touched 94.4625, its strongest level in five weeks.The currency’s decline against the dollar so far this year has narrowed to 5.6%, after hitting a record low of nearly 97 per dollar last month.Traders said lower oil prices and the prospect of stronger dollar inflows could provide support to the rupee in the near term.“The news of war ending is a positive development for the currency, but we may not see a one-way rally and the currency could move towards 93.25 in the near term,” Victor Roy, head of treasury at CTBC Bank, said, quoted Reuters.Brent crude fell more than 5% to about $83 a barrel on Monday, offering relief to India, which imports nearly 90% of its crude oil requirements.Economists have also upgraded their forecasts for India’s balance of payments following the RBI’s measures, with many now expecting a small surplus instead of a sizeable deficit projected earlier.The pace of any further rupee appreciation could depend on the RBI’s willingness to allow gains, traders said, as the central bank may use the currency’s strength to reduce its large foreign-exchange forward positions.The RBI’s short dollar positions in the foreign-exchange market had climbed to a record $104 billion in March, highlighting its efforts to support the rupee.
