The rupee appreciated 61 paise to close at 94.57 (provisional) against the US dollar on Wednesday, as Brent crude prices retreated from elevated levels towards $100 per barrel after US President Donald Trump hinted at a possible deal with Iran.
Forex traders said that with the Indian rupee facing severe pressure, the Reserve Bank of India (RBI) is also actively pursuing a "non-direct" strategy to support the currency.
Moreover, market sentiment was boosted after Trump paused "Project Freedom," a US operation to escort ships through the Strait of Hormuz.
1 May 2026
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At the interbank foreign exchange market, the rupee opened at 95 against the US dollar, then lost ground and touched an intraday low of 95.18. The rupee finally settled at 94.57 (provisional), registering a rise of 61 paise over its previous close.
On Tuesday, the rupee settled at 95.18 against the US dollar, after witnessing an all-time intraday low of 95.44, on possible RBI intervention after investors retreated from riskier assets amid renewed clashes in the Gulf and targeting of UAE infrastructure, which reignited supply chain fears.
According to CR Forex Advisors MD Amit Pabari, the Reserve Bank of India is exploring ways to support the currency without directly using its forex reserves.
Pabari further noted that one of the ideas being discussed is to encourage state-run banks to raise funds through foreign currency bonds, which could help bring fresh dollar inflows into the system.
President Trump has suspended "Project Freedom" to escort ships through the Strait of Hormuz, claiming progress in negotiations with Iran toward an agreement to end the war.
In a post on Truth Social on Tuesday, Trump said, "Great progress has been made toward a complete and final agreement with representatives of Iran." Project Freedom was launched on Monday to escort ships, stranded due to the closure of the Strait of Hormuz, out to safety. Trump had announced the operation on Sunday, and the US Central Command began implementing it the next day.
"The global mood showed a slight pause, but not a complete sense of relief. US President Donald Trump announced that "Project Freedom" will be temporarily paused to allow room for a possible agreement, which has helped cool some of the extreme uncertainty in the markets," Pabari said.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.79, down 0.66%.
Brent crude, the global oil benchmark, was trading lower by 8.25% at $100.81 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 940.73 points to settle at 77,958.52, while the Nifty surged 298.15 points to 24,330.95.
Foreign Institutional Investors sold equities worth ₹3,621.58 crore on Tuesday, according to exchange data.
Meanwhile, India's services sector growth climbed to a five-month high of 58.8 in April with new orders and output expanding at quicker rates, as firms indicated a shift from international to domestic suppliers amid the West Asia crisis, a monthly survey said on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 57.5 in March to 58.8 in April, showing the strongest rate of expansion since last November.
