Rupee snaps five-day losing streak as bond yields soften 10 bps

The rupee strengthened sharply and government bond yields eased after crude oil prices fell on hopes of a possible easing in US-Iran tensions

With crude oil prices tumbling on the possibility of an end to the US-Iran war, the rupee appreciated sharply while bond prices surged. 

Oil prices fell sharply following reports of US and Iran closing in on a one-page memo to end the war.  

In a social media post, US President Donald Trump said the Iran war could end with a deal, and warned that strikes will restart if an agreement isn't reached. 

The rupee ended its 5-day losing streak, gaining 0.72 per cent to settle at 94.61 per dollar against the previous close of 95.29  . 

“The rupee was looking oversold and was due for a correction with the Reserve Bank of India (RBI) taking a stance at 95.45 levels while ensuring it did not cross 95.50 levels. Foreign portfolio investors (FPIs), who were sellers of equity on Tuesday, would have been buying on Wednesday and selling dollars,” said Anil Kumar Bhansali, executive director and head of treasury, Finrex Treasury Advisors. 

The Indian unit was among the better performers among Asian currencies on Wednesday. South Korean Won, Japanese Yen, Thai Baht and Malaysian Ringgit performed better than the rupee.  

Yield on the benchmark 10-year government bond softened by 10 basis points (bps) to settle at 6.92 per cent, against the previous close of 7.02 per cent, its sharpest fall since April 8, 2026 – when a conditional two-week ceasefire was announced by Iran and the US. 

“The bond market rallied on the back of a fall in crude oil prices. Expectations that the US-Iran conflict may be nearing an end, with pressure also building from China, pulled oil prices lower. US yields softened and the rupee recovered, leading to an improvement in overall risk sentiment. Equity markets also moved higher, which supported the bond market,” a dealer at a primary dealership said. 

Yield on the benchmark 10-year government bond is likely to trade in a narrow range in the near term.  

“It is difficult for yields to break below 6.9 per cent at this point, and we see a range of 6.9 per cent to 6.96 per cent from here,” the dealer said. 

Brent crude prices slipped to around $103 per barrel during the day following the statement by Trump suggesting that Washington and Tehran were close to an understanding to end the conflict. 

Market participants said central bank intervention and cautious positioning by investors also aided the local unit during the day. 

“Central bank intervention and risk-averse sentiment provided additional support to the local unit. Markets continue to factor in a potential de-escalation of tensions and easing supply constraints, both of which have pulled crude and the greenback lower,” said Dilip Parmar, senior research analyst, HDFC Securities.

 

Market participants said that the rupee has support at 94.35 per dollar and resistance at 95.10. 

While the rupee depreciated 5 per cent in 2026 so far, but it gained 0.21 per cent since April.