The rupee rose sharply by 65 paise to 86.13 against the US dollar in early trade on Tuesday (June 24, 202) as crude oil prices fell following hopes of a ceasefire between Iran and Israel.

A weak greenback and a strong opening in the domestic equity markets further boosted the rupee, according to forex traders.

Brent crude, the global oil benchmark, declined 2.73 per cent to USD 69.53 per barrel in futures trade as US President Donald Trump announced that Iran and Israel were close to a ceasefire.

At the interbank foreign exchange, the local unit opened at 86.07 against the US dollar before dipping to 86.13, up 65 paise against the greenback from its previous close.

The rupee had plunged 23 paise to close at a five-month low of 86.78 against the US dollar on Monday (June 23).

“Trump said overnight that a ceasefire between Israel and Iran has been done while Iran has not confirmed it as yet. However, the market has taken this into consideration with oil falling below USD 70,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

“The USDINR gained to almost 86.00 levels and opened at 86.07 after the ceasefire announcement by Mr. Trump. The markets now await FED Chief Powell’s testimony on Tuesday and Wednesday in which he may indicate about cutting of rates to the Senate and House,” he said.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.29 per cent lower at 98.13.

The domestic equity market rebounded from Monday’s losses as Sensex jumped 930.7 points to 82,827.49, while Nifty surged 278.95 points to 25,250.85.

Foreign institutional investors (FIIs) offloaded equities worth ₹1,874.38 crore on a net basis on Monday, according to exchange data.