The Indian rupee strengthened in early trade on Monday, May 25, 2026, rising 40 paise to 95.20 against the U.S. dollar as global currency markets reacted to hopes of an easing of geopolitical tensions and prospects of progress in India-U.S. trade ties. The local currency opened at 95.36 in the interbank foreign exchange market and soon advanced to 95.20, recovering from its previous close of 95.60 on Friday, May 22, when it had gained 75 paise. Traders said sentiment was supported by reports that the United States and Iran were moving closer to a peace agreement, even though significant differences remained over critical issues, including blockades around the Strait of Hormuz. U.S. President Donald Trump has cautioned negotiators not to rush into a deal, saying both sides should take time to get it right. At the same time, U.S. Secretary of State Marco Rubio said the U.S. and India were near finalising an interim trade agreement, following progress in discussions and ahead of a likely visit by the U.S. Trade Representative to India. Rubio made the remarks after talks with External Affairs Minister S. Jaishankar during his four-day visit, where both sides discussed expanding cooperation in trade, critical minerals, energy, and defence. Market participants said the rupee also drew support from weakness in the dollar and a sharp fall in crude oil prices. The dollar index slipped 0.20% to 99.04, while Brent crude futures fell 5.43% to $97.92 a barrel, easing pressure on oil-importing economies such as India. On the domestic equity market, optimism was also visible as the Sensex jumped 908.98 points to 76,317.85 and the Nifty rose 262.65 points to 23,977.70 in early trade. However, foreign institutional investors remained net sellers, offloading equities worth ₹4,440.47 crore on Friday, May 22, according to exchange data. Currency traders also noted that liquidity conditions may stay mixed during the day because it was a U.S. holiday, which could reduce cash demand, though month-end demand may still emerge. Analysts said the Reserve Bank of India was likely to remain active in the market to monitor and manage volatility in the dollar-rupee pair. Separately, the RBI reported that India’s foreign exchange reserves fell by $8.094 billion to $688.894 billion in the week ended May 15, after having risen by $6.295 billion to $696.988 billion in the previous week ended May 8. Overall, the rupee’s advance reflected a combination of geopolitical optimism, expectations of a possible trade breakthrough with the U.S., lower oil prices, and a softer dollar environment.
