Rupee turned sharply higher on Thursday afternoon, boosted ​by a slump in crude oil prices, with stop-losses on short ‌rupee wagers and dollar sales in the non-deliverable forward ​market also lifting the currency, traders said.

Brent crude ⁠fell below $100 per barrel, down nearly 3% and reversing course after touching a peak of $102.5 on the day, as the United States ‌and Iran edge toward a temporary agreement to halt their war, sources and officials said.

The retreat ‌in oil prices lifted Asian currencies broadly, including the ‌rupee, ⁠which strengthened by as much as 0.5% before ending ⁠the session at 94.25, sharply stronger than its intra-day low of 94.9025.

The pullback in crude prices offers much-needed relief for India, the world’s third-largest ​oil importer. Surging oil prices ‌since the start of the Middle East war had prompted economists to forecast a weaker rupee, revise inflation expectations higher and lowerIndia’s economic growth outlook.

Dollar-rupee forward premiums, the ‌cost of hedging currency exposure, retreated, with the one-year ​forward implied yield slipping to a three-week low of 2.97%.

There was very heavy selling interest ⁠in the NDF market, which likely means short rupee wagers were unwound, a trader at a foreign bank said.

A second trader ‌at a private lender added that a large Indian state-run bank and a U.K. headquartered bank were seen selling dollars heavily in the local spot market.

The one-month dollar-rupee 25-delta risk reversal, a gauge of options market sentiment, signalled reduced appetite for bearish rupee wagers.

“The improvement in global investor ‌risk sentiment and drop in energy prices is providing a tailwind for ​emerging market currency performance,” analysts at MUFG said in a note.

“Latest developments add to investor confidence ⁠that the US and Iran continue to make progress to find ⁠a diplomatic solution,” the note said.

Asian currencies were up between 0.2% and 0.6%, while the dollar index ‌eased 0.2% to 97.87.

Global equities benefited from the improved risk mood, with MSCI’s gauge of Asia pacific stocks ​gaining more than 2%.

Published on May 7, 2026