Rupee gains 14 paise on Trump hint of no Iran action for now, equity flows

The Indian rupee edged higher to 86.58 per dollar on Friday, marking its first gain in six sessions, fueled by inflows into domestic equities. This appreciation occurred despite high crude oil prices and ongoing tensions between Israel and Iran. Market sentiment was buoyed by signals from US President Trump suggesting a delay in action against Iran.
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The Indian rupee modestly strengthened Friday, its first advance in six days tracking inflows into domestic equities, to close at 86.58 per dollar. The rupee climbed 14 paise despite volatile oil prices and no immediate signs of a truce in the Israel-Iran conflict.The strength in the rupee came after US President Donald Trump signalled to avoid any precipitate action on Iran. Rebalancing of the FTSE Russell index also led to some flows, traders said. The rupee traded between 86.54 and 86.67 to the dollar on Friday. Brent crude oil prices remained elevated at $77 per barrel, while the dollar index was at 98. A rise in crude oil prices is detrimental to inflation in India as the country is a large importer of the commodity. "Chances of rupee strengthening are very low while crude oil prices are this high. The gain we have seen today is all because of Trump's comments to postpone strikes on Iran," said Anil Bhansali, head of treasury at Finrex Treasury Advisors.The Reserve Bank of India was likely absent today and did not intervene, traders said."The rebalancing flows of the FTSE Russell Index did help, but dollar demand was strong too, which countered the inflow," a trader said. Foreign investors bought Indian equities worth ₹7,940.7 crore on Friday."The only positive we have seen is that FPIs are not large sellers in Indian equities," Bhansali said.

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Time of India

20 minutes ago

• Time of India

Fordoward Thinking

Iran may still negotiate with US, taking a long view, while skirmishing with Israel. Even if its nuclear infra is damaged, its knowhow isn't. But if the conflict spreads, welfare of 9mn Indians in the region will be New Delhi's first concern For two decades every United States administration said it might someday bomb Iran's enrichment plants. On Saturday night that 'someday' arrived. B-2 stealth bombers dropped 30,000-pound 'bunker buster' bombs while submarines and aircraft launched Tomahawks at Fordow, Natanz and Isfahan, the three most consequential nodes in Iran's IAEA monitored nuclear network. Trump declared that 'Fordow is gone', and that Tehran must 'agree to end this war'. The flourish was vintage Trump – muscular and headline grabbing. But behind the applause lines lies a strategic gamble whose downsides may echo far beyond Qom. Trump crossed a threshold earlier presidents tiptoed around, turning an Israel-Iran slugfest into a US-Iran confrontation. He insists the raid was a 'one-off', intended to cripple enrichment. Although neither US nor Israel has produced evidence that Iran was on the brink of building a bomb, the Pentagon's quick look report claims the strikes set the programme back by years at minimal cost. Physics, however, counsels humility. Centrifuges are hardware while enrichment expertise is software lodged in scientists' heads. Bombs can destroy cylinders but not knowledge. Hardliners in Tehran will now argue that only a nuclear weapon can deter the next bunker buster. Did the raid delay a bomb or make it inevitable? Iran accused US of a grave violation of the UN Charter, NPT and international law and vowed that it will not go unanswered. The easiest escalation is to menace the Strait of Hormuz through which about a fifth of global oil passes every day. Next may come missile salvos on Gulf energy infra or on US installations, and then the possible activation of proxies from Lebanon to Yemen. With Iran's parliament reportedly approving the closure of the strait, Brent could easily move past $100 a barrel. Oxford Economics projects $130 if flows are disrupted, a level that would push world inflation back toward 6%. Traders are already paying a war premium in afterhours quotes. Jerusalem meanwhile is jubilant. Netanyahu called the strike a bold decision. Strategically Israel has shifted part of the fight and the risk to Washington. If Iran retaliates, Americans rather than Israelis will calibrate the counterpunch. That is deterrence by entanglement in the short run. Over time it hands Iran a larger menu of US targets and risks dragging America into a war it does not want. Russia immediately cited the bombing as proof of US recklessness while Beijing called it a serious violation of international norms. Any condemning move at the Security Council will face a US veto. However, in the General Assembly the Global South is expected to side with Iran in significant numbers. For India the strike lands like a thunderclap at a cricket match. New Delhi has tried to balance a growing partnership with Washington, deep defence ties with Israel and consequential arrangements with Tehran, from the Chabahar port to International North-South Transit Corridor and once-robust crude imports. That balancing act has lately been criticised by the main opposition party. ● The immediate anxiety is economic. The Gulf supplies 54% of India's oil, generates about 40% of its remittances and accounts for more than $170bn in two-way trade. India imports more than 80% of its crude; every ten dollar rise in Brent adds about one billion dollars a month to the import bill and pressures the rupee. Consumer inflation just slipped below 5%; a Hormuz scare could undo that gain and complicate RBI's plan to cut rates. GOI is already moving to secure supplies, eyeing the strategic petroleum reserve and talking to several producers to ensure continuity. ● A second priority is the safety of nearly nine million Indians working in the region. Evacuation from Iran and Israel is underway. Operation Sankalp ships in the region can be helpful, if required. Diplomatically India has open channels with Washington, Tehran and Jerusalem, but leverage is thin while missiles fly. Still New Delhi may be able to offer discreet messages that help each side edge away from the brink, just like back-channel efforts by Qatar and Muscat. Meanwhile others such as Saudi Arabia and UAE are actively counselling restraint. The key actors need face-saving options. That also means Washington spelling out what de-escalation looks like. Would it accept enrichment capped below weapons grade? Does it envisage returning to the JCPOA framework with phased sanctions relief? Absent clarity Tehran will read 'time for peace' as code for surrender. In US, supporters have praised decisive action; critics have warned that the President had bypassed Congress and demanded a War Powers vote. Trump's boast that the mission was historic and limited is politically smart yet strategically ambiguous. If Iran swallows the blow and returns to talks the White House can claim victory. If Tehran retaliates Washington can strike again and say it had no choice. Either way the attack chips away at the nonproliferation regime and bets that humiliation will not ignite a wider war. The US entry into another West Asian conflict recalls 1991 and 2003, but this round involves nuclear facilities, peer power pushback and an energy hungry Global South. Fordow's tunnels may indeed be rubble, yet geopolitics rarely collapses neatly. US strikes may be tactically brilliant. Strategically they kick a radioactive can down a much steeper road. That road needs to be kept from becoming a cratered battlefield. The test is whether diplomacy can move faster than the bunker busters. The writer is former permanent representative of India to UN and served as an international civil servant at IAEA Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.

Economic Times

23 minutes ago

• Economic Times

Tel Aviv shares hit record highs after US strikes Iran nuclear sites

Israeli stocks surged to record highs following U.S. strikes on Iranian nuclear sites, perceived by investors as a significant step in preventing Iran's nuclear weapons development. The Tel Aviv 125 index climbed 1.8%, marking a nearly 8% gain for the week, while the TA-35 rose 1.5%. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads obliterated Israeli stocks hit record highs on Sunday after the U.S attacked Iran's nuclear sites in strikes investors believe would likely prevent Tehran from developing nuclear weapons anytime broad Tel Aviv 125 index closed 1.8% higher, extending gains to nearly 8% the past week, while the blue-chip TA-35 gained 1.5%.On the heels of Israeli strikes in Iran, shares rose during all five sessions last week, gaining some 6%, as Israel hit Iranian nuclear and military targets prior to Saturday's surprise U.S. attacks."The destruction of Iran's key nuclear facilities by the U.S. military is, of course, a positive development ... in terms of improving the regional security environment and reducing Iran's military and nuclear capabilities," said Mizrahi Tefahot chief markets economist Ronen Menachem . "It's a game-changer."Israel began its punishing attacks on Iranian nuclear facilities, ballistic missile factories and military commanders on June 13, which have been met with retaliatory Iranian strikes against Israel.U.S. President Donald Trump said he had "" Iran's main nuclear sites in strikes overnight with massive bunker busting bombs, joining an Israeli assault in a significant new escalation of conflict in the Middle vowed to defend itself, and responded with a volley of missiles at Israel that wounded scores of people and destroyed buildings in Tel Aviv on for more than a week, local markets have cheered Israel's actions in addition to gains in shares, government bond prices have risen, the shekel has appreciated and Israel's risk premium has edged prices increased as much as 0.2% on Sunday. The shekel does not trade on Sunday but it has rallied from 3.61 per dollar on June 11 to 3.48 on Friday and is up some 1% this month."Looking at the medium- to long-term - which is relevant for many strategic investors - this could represent a genuine opportunity, possibly related to the prospect of closer ties between the Saudi and American axis," Menachem said."The question is whether and to what extent last week's sharp market gains already priced it in. A plausible scenario includes, at least in the initial response, further increases in equities, corporate bonds, and government bonds."

NDTV

24 minutes ago

• NDTV

Oil Prices Jump, Asian Markets Plunge As Middle East Crisis Escalates

New Delhi: Asian markets plunged while oil prices briefly hit five-month highs on Monday amid concerns of disruption to energy markets after the United States joined Israel in attacking Iran's nuclear facilities, escalating the Middle East crisis. Iran is the world's ninth-biggest oil-producing country, with an output of about 3.3 million barrels per day. Tehran exports almost half of that amount and keeps the rest for domestic consumption. And if Tehran decides to retaliate, observers say one of its options would be to seek to close the strategic Strait of Hormuz -- which carries one-fifth of global oil output. Oil prices were up over 2 per cent, their highest since January. Brent was up a relatively restrained 2.7 per cent at $79.12 a barrel, while US crude rose 2.8 per cent to $75.98. Asian stocks were also lower as traders digested the weekend's events, as investors anxiously awaited Tehran's retaliation to US attacks on Iranian nuclear sites. Iran has threatened US bases in the Middle East as fears grow of an escalating conflict in the volatile region. Share markets in the US showed some resilience, with S&P 500 futures falling a moderate 0.5 per cent and Nasdaq futures down 0.6 per cent. In the Asian market, Tokyo's key Nikkei index was down 0.6 per cent while Seoul fell 1.4 per cent and Sydney was 0.7 per cent lower. MSCI's broadest index of Asia-Pacific shares outside Japan also fell 0.5 per cent. In Europe, EUROSTOXX 50 futures lost 0.7 per cent, while FTSE futures fell 0.5 per cent and DAX futures slipped 0.7 per cent. Europe and Japan are heavily reliant on imported oil and LNG, whereas the United States is a net exporter. In commodity markets, gold edged down 0.1 per cent to $3,363 an ounce. The dollar, meanwhile, edged up 0.3 per cent on the Japanese yen to 146.48 yen, while the euro dipped 0.3 per cent to $1.1481. The dollar index firmed 0.17 per cent to 99.078. There was also no sign of a rush to the traditional safety of Treasuries, with 10-year yields rising 2 basis points to 4.397 per cent. More Volatility Expected Market participants are expecting more price gains amid mounting fears that Iran may retaliate against the US with the closure of the Strait of Hormuz-- which is only about 33 km (21 miles) wide at its narrowest point and sees around a quarter of global oil trade and 20 per cent of liquefied natural gas supplies. Tehran has in the past threatened to close the strait but has never followed through on the move. But, following America's action, Iran's Press TV reported that the Iranian parliament approved a measure to close the strait. Optimists are hoping that Tehran may back down now that its nuclear ambitions have been curtailed, or even that regime change might bring a less hostile government to power there. However, analysts at JPMorgan cautioned that past episodes of regime change in the region typically resulted in oil prices spiking by as much as 76 per cent and averaging a 30 per cent rise over time. "Selective disruptions that scare off oil tankers make more sense than closing the Strait of Hormuz given Iran's oil exports would be shut down too," Vivek Dhar, a commodities analyst at Commonwealth Bank of Australia told Reuters. "In a scenario where Iran selectively disrupts shipping through the Strait of Hormuz, we see Brent oil reaching at least $100/bbl," he added.