The rupee closed stronger on Tuesday, supported by the unwinding of residual arbitrage positions, while traders braced for a U.S. deadline to reach a deal with Iran and the Reserve Bank of India’s monetary policy decision.
The rupee closed up 0.1% at 93.0075 against the U.S. dollar, its strongest closing level since mid-March.
The currency has found its footing after hitting a series of record lows over the past month, helped largely by the RBI’s measures to curb arbitrage and speculative activity in the domestic foreign exchange market.
The unwinding of arbitrage positions, however, has widened the gap between onshore and non-deliverable forwards, with the spread between 1-month tenors rising to the highest level since the Covid-19 pandemic disrupted global markets.
The rupee lately came under pressure from the escalating conflict in the Middle East.
Iran and Israel traded attacks on Tuesday as Tehran refused to reopen the Strait of Hormuz and accept a ceasefire deal on the eve of a deadline set by U.S. President Donald Trump.
Trump has threatened to strike civilian infrastructure in Iran in the absence of a deal by 8 p.m. ET on Tuesday (0000 GMT Wednesday).
“No one knows whether the deadline is another bout of maximalist pressure from the White House, but until there is news of a ceasefire, or perhaps a prolonged postponement of the current deadline, the dollar is likely to stay bid,” ING said in a note.
Concerns over the conflict have kept oil prices near $110 per barrel, and driven foreign investors out of Indian stocks.
Foreign investors have net sold nearly $16 billion of domestic equities over March and April so far.
Traders also await the RBI’s policy decision on Wednesday.
The central bank is widely expected to keep rates unchanged, with focus on its readiness to support the rupee and inject liquidity to keep bond yields in check.
Published on April 7, 2026
