The rupee rose 5 paise to 95.53 against the U.S. dollar in early trade on Friday (May 29, 2026), after the U.S. and Iran reached an understanding to extend the ceasefire for another 60 days.

Forex traders said the agreement is expected to keep trade flowing through the strategic Strait of Hormuz while both countries continue negotiations around Iran’s nuclear program.

At the interbank foreign exchange market, the rupee opened at 95.77 against the U.S. dollar, then gained ground and touched 95.53 in early trade, up 5 paise from its previous close. In initial trade the rupee also touched 95.78 against the American currency.

On Wednesday (May 27), the rupee settled higher by 12 paise at 95.58 against the U.S. dollar.

Domestic equity and forex markets were closed on Thursday on account of Id-ul-Azha.

U.S. and Iranian negotiators reached a tentative agreement on Thursday (May 28) to extend the ceasefire in the three-month-old war by 60 days.

“For markets, this mattered because it reduced immediate fears of fresh disruption in oil supplies. As a result, crude oil prices stayed relatively stable, something that always offers relief to oil-importing countries like India,” CR Forex Advisors MD Amit Pabari said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading at 99.09, up 0.07%.

Brent crude, the global oil benchmark, was trading down 1.12% at $92.66 per barrel in futures trade.

According to traders a softer dollar and stable oil prices could provide some near-term support to the rupee. However, the rupee’s biggest challenge right now remains foreign investment flows.

Foreign institutional investors (FIIs) have sold nearly $24 billion from Indian equity markets since the beginning of 2026. Debt market flows, in comparison, have remained relatively stable with inflows of around $1 billion.

Foreign institutional investors offloaded equities worth ₹1,042.70 crore on a net basis on Wednesday (May 27), according to exchange data.

“The RBI has already been using several tools to stabilise the rupee, including liquidity operations, forex management measures and steps to curb speculative positions. But if pressure on the currency continues, interest rates could eventually become the next line of defence,” Mr. Pabari said, adding that “the upcoming RBI policy meeting between June 3 and June 5 has become extremely important.”

“As long as global risk sentiment continues improving and crude oil prices remain under control, the rupee could gradually appreciate toward the 94.50–94.80 region in the near term.

“Any cautious signal from the RBI could further strengthen that recovery by improving investor confidence and attracting flows back into the system,” he said.

U.S. President Donald Trump on Monday (May 11, 2026) said the ceasefire with Iran was at its “weakest” and on “massive life support”, a day after he rejected Tehran’s proposal to end the months-long war as “totally unacceptable”.

Also read: West Asia war updates on May 11, 2026

“It is at its weakest… After reading that piece of garbage they sent us… It’s on life support, massive life support,” Mr. Trump told reporters at the Oval Office in response to a question on the ceasefire with Iran in the wake of the rejection of the peace proposal.

During an event on Maternal Healthcare at the White House, Mr. Trump asked the participants to keep their remarks short, as he had a meeting with a large group of generals on the issue of Iran.

Mr. Trump received the Iranian proposal on Sunday (May 10, 2026) amid hopes that it could lead to a breakthrough to end the war with Iran that began on February 28, blocking the key sea route for global oil supplies, leading to fuel shortages in several countries.

“I have just read the response from Iran’s so-called  Representatives.’ I don’t like it,” he wrote on his Truth Social platform on Sunday (May 10, 2026), calling the response “totally unacceptable”.

On Monday (May 11, 2026), the President described Iran’s proposal as a “piece of garbage” which he was not going to waste time reading.

“They think that I’ll get tired of this, or I’ll get bored, or I’ll have some pressure, but there’s no pressure; there’s no pressure at all. We’re going to have a complete victory,” Mr. Trump said.

“I have the best plan ever. Iran has been defeated militarily. Totally. They have a little left; they probably built up during this period of time. We’ll knock that out in about a day. But I have a plan. You know, that’s a very simple plan. I don’t know why you don’t say it like it is. Iran cannot have a nuclear weapon. They’re very dangerous. They’re very volatile,” Mr. Trump said.

Asked about the status of the ceasefire with Tehran, Mr. Trump said it is “unbelievably weak.”

“I would say I would call it the weakest right now. After reading that piece of garbage, they sent us. I didn’t even finish reading it. They said, I’m not going to waste my time reading it. I would say it’s one of the weakest right now,” he said.

The President also said that Iran told him that the U.S. would have to dig out the “nuclear dust” at its facilities because it is buried so deep that they can’t get to it.

Mr. Trump said that he doesn’t know at this moment how the U.S. would get into Iran to proceed with the removal. He said it is a matter for further negotiation.

The U.S. and Israel’s war on Iran started on February 28, and attacks have been paused since April 8, when the warring sides agreed to a ceasefire. The U.S. and Iran have been negotiating a deal to end the hostilities for good, but peace has been elusive so far.

Pakistan hosted one round of direct talks between Iran and the U.S. on April 11, but the two sides failed to reach an agreement.

The U.S. has been insisting that Iran give a clear commitment to end its uranium enrichment programme in exchange for the lifting of sanctions and release of billions in frozen Iranian funds.

The negotiations also entail both Iran and the U.S. lifting the blockade of the Strait of Hormuz, a key passageway for one-fifth of the global crude supplies.

U.S. President Donald Trump said on Wednesday (April 8, 2026) that the United States will help with traffic buildup in the Strait of Hormuz, hours after Washington and Tehran agreed to a truce.

The countries agreed to a two-week ceasefire barely an hour before Mr. Trump’s Wednesday (April 8) deadline to obliterate Iran was set to expire.