MUMBAI: The rupee rose 58 paise against the greenback to 94.60 in early trade on Monday as global crude oil prices dropped sharply after US President Donald Trump announced that the US and Iran finalised a deal to end the war.
A strong start to the day at the domestic equity markets and a weaker US dollar further drove the local unit, forex traders said.
At the interbank foreign exchange, the rupee opened at 94.70 against the US dollar before rising further to 94.60, up 58 paise from its previous close.
The rupee surged 67 paise to close at 95.18 against the greenback on Friday.
The US and Iran finalised a deal to end their 107-day war and open the Strait of Hormuz, the narrow waterway used to ferry one-fifth of the global oil supplies, on Friday after an in-person signing of the agreement in Switzerland.
US President Donald Trump made the announcement on Truth Social on Sunday evening, easing pressure on the global energy markets, as officials said the peace agreement would be signed on June 19 in Switzerland.
"The Deal with the Islamic Republic of Iran is now complete. Congratulations to all," Trump said, adding that it would reopen the Strait of Hormuz and end the US naval blockade on Iranian ports.
"Rupee movement today will be significantly influenced by the peace deal between US and Iran and the consequent crash in Brent crude. This means India's balance of payments problem for FY27 is no longer a serious issue," V K Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, said.
"Rupee started appreciating from the low of 96.96 to the dollar touched on May 20. Today the appreciating trend will continue and the rupee is likely to trade in the 94.80 to 94.60 range with scope for further appreciation in the coming days," Vijayakumar added.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.53, down 0.22 per cent.
Brent crude, the global oil benchmark, was trading lower by 4.66 per cent at USD 83.26 per barrel in futures trade.
On the domestic equity market front, Sensex surged 1,112.70 points to 76,648.74 in early trade, while Nifty rose sharply by 335.55 points to 23,956.40.
Foreign institutional investors offloaded equities worth Rs 1,082.18 crore on a net basis on Friday, according to exchange data.
India's forex reserves dropped USD 711 million to USD 681.610 billion during the week ended June 5 due to a sharp decline in foreign currency reserves, the RBI said on Friday.