Mumbai, April 8 The rupee appreciated by 47 paise to close at 92.59 (provisional) against the US dollar on Wednesday after US President Donald Trump announced the suspension of military strikes against Iran for two weeks, and the Reserve Bank kept the key benchmark rate unchanged with a neutral stance.
Forex traders said investor sentiment got a boost after Governor Sanjay Malhotra assured that the steps taken on forex do not constitute a structural change.
Moreover, confidence was exuded in the health of the banking system, notwithstanding recent developments in some private banks. Malhotra said the banking sector regulator did not come across any governance or conduct-related issues during the supervisory inspection of HDFC Bank.
At the interbank foreign exchange market, the rupee opened at 92.92 against the US dollar, then gained ground to touch 92.56 against the US dollar in initial trade and finally ended the day at 92.59 (provisional) against the greenback, registering a gain of 47 paise over its previous close.
On Tuesday, the rupee settled 16 paise down at 93.06 against the American currency.
The Reserve Bank of India kept its key policy rate unchanged on Wednesday, adopting a wait-and-watch stance as policy makers assessed the fallout from the six-week Iran conflict on energy supplies, inflation and growth.
The central bank's six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows.
RBI's policy stance was retained at neutral.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.96 per cent at 98.90.
The RBI said it expects crude oil prices to average USD 85 per barrel and the rupee to be at 94 against the dollar in FY27.
The central bank has made the projections in a bi-annual Monetary Policy report released on Wednesday.
The crude oil price assumption has been upped to USD 85 per barrel during FY27, from USD 70 per barrel during H2FY26. It also increased exchange rate projections to 94 against the US dollar during FY27, from 88 against the greenback during H2FY26, the report showed.
Brent crude, the global oil benchmark, was trading lower by 13.73 per cent at USD 94.27 per barrel in futures trade, after the announcement of the ceasefire.
President Trump announced a two-week suspension of military strikes against Iran just hours before his Tuesday deadline for the opening of the Strait of Hormuz.
Iran agreed to allow safe navigation through the Strait of Hormuz during the ceasefire, triggering sweeping market moves across oil, equities and currencies.
On the domestic equity market front, Sensex jumped 2,946.32 points to settle at 77,562.90, while the Nifty surged 873.70 points to 23,997.35.
Foreign Institutional Investors offloaded equities worth Rs 8,692.11 crore on Tuesday, according to exchange data.