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The rupee is gaining strength on the back of oil price decline and NDF dollar sales

Stop-losses on short rupee bets and dollar sales in the non-deliverable future market also helped the rupee, traders reported.

Brent crude dropped to a low price of $97.4 per barrel before paring its losses and trading at $100.26 last, down by 1%. This is a reversal of course from the peak of $102.5.

The rupee strengthened by 0.5%, to 94.0950 dollars, as a result of the decline in oil prices.

India, which is the third largest oil importer in the world, and the rupee will benefit from a drop in crude prices.

Oil prices have risen dramatically since the Middle East conflict began, prompting economists to lower their?rupee predictions, increase inflation expectations and reduce growth forecasts.

The cost of hedging currency exposure with dollar-rupee forward premiums has fallen. The implied yield for one year ahead fell to a new three-week low, at 2.97%.

A trader from a foreign bank stated that there is a lot of selling interest on the NDF, which means that short rupee bets are unwinding.

The fall in crude oil prices has 'cooled down a persistently negative bias towards the Indian currency. The 25-delta dollar-rupee risk reversal for one month, which is a measure of the options market's sentiment, showed a reduced appetite for rupee-bearish wagers.

Since the beginning of the week, optimism about a U.S.Iran deal has risen. This includes a?reopening of the Strait of Hormuz. Analysts at ING said that the dollar would continue to fall if an agreement is reached.

The dollar index fell 0.1%, while Asian currencies rose between 0.2% to 0.5%.

The improved risk'mood' has helped global equities, as MSCI Asia Pacific stocks gained more than 2%. U.S. equity?futures also pointed to a stronger opening on Wall Street.

(source: Reuters)