The Indian rupee rallied to a six-week high on Thursday, reaching an intraday peak of 94.2175 per U.S. dollar, its strongest since May 7, before settling at 94.2925, up 0.25% on the day. The gains were driven by exporter flows and offshore dollar selling, which reversed early losses that had pushed the rupee to 94.70 after a hawkish Federal Reserve outcome. Nine of 18 Fed policymakers pencilled in a rate hike this year, far more than anticipated, with one projecting three 25-basis-point hikes over the next six months and five projecting two. Markets are now pricing in 32 basis points of rate hikes this year and a cumulative 42 basis points by this time next year, according to ING. A further decline in oil prices also supported the rupee, with Brent crude futures falling 2.5% in Asian trade to $77.58 per barrel after the U.S. and Iranian presidents signed an interim peace deal.
Brent crude falls 2.5% after US and Iranian presidents sign interim peace deal, easing supply concerns.
Rupee strengthens on exporter flows and offshore dollar selling, while hawkish Fed outlook is offset by oil price decline and peace deal.