With crude oil prices tumbling on indications of a possible end to the conflict between Iran and the US, the rupee appreciated sharply while bond prices surged.

Oil prices fell sharply following reports of the US and Iran moving closer to a one-page memorandum to end the war. In a social media post, US President Donald Trump said the conflict could end with a deal and warned that strikes would restart if one was not reached.

The rupee ended its five-day losing streak, gaining 0.72 per cent to settle at 94.61 per dollar against the previous close of 95.29 per dollar.

“The rupee was looking oversold and was due for a correction with RBI taking a stance at 95.45 levels and ensuring the rupee did not cross 95.50 levels, while FPIs who were sellers of equity yesterday would have been buying today and selling dollars,” said Anil Kumar Bhansali, executive director and head of treasury, Finrex Treasury Advisors.

The Indian unit was among the better-performing Asian currencies on Wednesday. The South Korean won, Japanese yen, Thai baht and Malaysian ringgit performed better than the rupee.

The yield on the benchmark 10-year government bond softened by 10 basis points to settle at 6.92 per cent against the previous close of 7.02 per cent — its sharpest fall since April 8, 2026 — when a Pakistan-mediated conditional two-week ceasefire was announced between Iran and the US following a 40-day conflict.

“Bond market rallied on the back of the fall in crude oil prices. Expectations that the US-Iran conflict may be nearing an end, with pressure also building from China, pulled oil prices lower. US yields softened and the rupee recovered, leading to an improvement in overall risk sentiment. Equity markets also moved higher, which supported the bond market,” a dealer at a primary dealership said.

The yield on the benchmark 10-year government bond is likely to trade in a narrow range in the near term. “It is difficult for yields to break below 6.90 per cent at this point, and we see a range of 6.90 per cent to 6.96 per cent from here,” the dealer said.

Brent crude prices slipped to around $103 per barrel during the day following remarks by US President Donald Trump suggesting that Washington and Tehran were close to a one-page understanding to end the conflict, raising hopes of de-escalation.

Market participants said that central bank intervention and cautious positioning by investors also aided the local unit during the day.

“Central bank intervention and risk-averse sentiment provided additional support to the local unit. Markets continue to factor in a potential de-escalation of tensions and easing supply constraints, both of which have pulled crude and the greenback lower,” said Dilip Parmar, senior research analyst, HDFC Securities.

Market participants said the rupee has support at 94.35 per dollar and resistance at 95.10 per dollar.

While the rupee has depreciated 5 per cent in 2026 so far, it has gained 0.21 per cent since April.