The Indian Rupee (INR) rebounded against the US Dollar (USD) at the opening of Tuesday's session, following a sharp decline the previous day. The USD/INR pair dropped to near 95.50 as oil prices fell, driven by reports of a ceasefire between Israel and Iran after recent hostilities over the weekend [1]. The MCX Crude Oil contract expiring on June 18 was down 1% to near 8,600, reflecting the broader retreat in oil prices after Iran confirmed it would halt attacks on Israeli territory. However, Iran's armed forces warned of harsher attacks if Israel resumes attacks on Lebanon [1].
Iran agreed to a truce with Israel after US President Donald Trump urged both sides to stop attacking each other immediately. On late Monday, President Trump expressed confidence that Washington could announce a total victory over Iran in the next two weeks and predicted that oil prices would 'come tumbling down' [1].
Foreign Institutional Investors (FIIs) continued to pare their stakes in the Indian stock market amid concerns over India Inc.'s earnings projections in the context of higher energy prices. In June, FIIs have been net sellers on all trading days, offloading stakes worth Rs. 36,370.14 crore. In May, FIIs also remained net sellers, selling investments worth Rs. 55,963.33 crore [1].
Looking ahead, investors are awaiting Consumer Price Index (CPI) data for May from both the US and India, scheduled for release on Wednesday and Friday, respectively. The US headline CPI is expected to rise to 4.2% Year-on-Year (YoY) from 3.8% in April, while the US core CPI is seen higher at 2.9% from 2.8%. Signs of accelerating US inflation could prompt expectations of Federal Reserve interest rate hikes this year. India's CPI for May is also expected to increase to 4% YoY from 3.48% in April. The Reserve Bank of India (RBI) recently warned of upside inflation risks and indicated that policy action may be necessary if inflation becomes generalized and persistent [1].
Technically, USD/INR trades slightly lower at around 95.50, remaining essentially flat and trading sideways for almost two weeks. The Relative Strength Index (RSI) at 53.46 suggests balanced momentum [1].
CONCLUSION
The Indian Rupee's rebound is closely tied to falling oil prices following the Iran-Israel ceasefire, with market participants also monitoring upcoming CPI data for further direction. Persistent FII selling reflects ongoing concerns about earnings and inflation risks. The market remains cautious, awaiting key economic indicators and potential policy responses.