Is The Worst Over? Expert Decodes US-Iran Deal Impact On Inflation, Rupee

Summary

- An agreement between the US and Iran is easing global geopolitical risk premiums for markets - Brent crude oil prices fell from above $100 to around $75-$78 per barrel after the US-Iran deal - Lower oil prices can reduce India's import bill, inflation, and ease pressure on the current account Stock Market Today: An agreement between the US and Iran is beginning to shift sentiment across global markets. While diplomats focus on ceasefire terms and negotiations, investors are watching something else: the possibility that a major geopolitical risk premium could start disappearing. According to Hemant Sood, Founder and Managing Director of Findoc, markets had spent months pricing in the possibility of a wider conflict in the Middle East. Any signs of de-escalation, he says, can have far-reaching consequences for oil prices, inflation, currencies and equity markets. "The market impact of a peace agreement goes beyond diplomacy. It changes how investors price risk," Sood said. Oil prices are the first thing investors are watching. The biggest immediate impact is being felt in the oil market. The Strait of Hormuz, a critical shipping route, carries a significant share of the world's oil trade. During the recent tensions, concerns about supply disruptions pushed Brent crude above $100 per barrel. Following reports of the US-Iran agreement, however, Brent crude retreated to around $75-$78 per barrel. Sood noted that this decline is particularly important for India, which imports nearly 88 per cent of its crude oil requirements. "A sustained fall in oil prices can reduce India's import bill, ease pressure on the current account deficit and help contain inflation," he added. The drop in crude prices has already helped improve market sentiment. Indian equities rallied for several sessions as investors responded positively to lower energy costs despite US Federal Reserve' keeping the rates steady. Lower Oil Could Help Tame Inflation Energy prices have a direct bearing on inflation, especially in an import-dependent economy like India. Recent data showed consumer inflation moving up to 3.93 per cent in May from 3.48 per cent in April. Food inflation also edged higher. Wholesale inflation, which is more sensitive to fuel and commodity prices, remained elevated. According to Sood, these figures underline how closely inflation is linked to global energy markets. "If crude remains below $80 and shipping costs normalise, the inflation outlook could improve over the next few quarters," he said. That, in turn, could give policymakers greater flexibility. RBI May Get Some Breathing Room The Reserve Bank of India has maintained a cautious stance amid concerns over global uncertainty and energy prices. Sood believes a durable easing of tensions in the Middle East could reduce some of those concerns. While that does not automatically translate into immediate rate cuts, it lowers the need for policymakers to remain overly defensive, he said. A more stable inflation environment could give the central bank additional room to support growth if needed. Another area that investors are closely monitoring is the rupee. Periods of geopolitical conflict typically lead to higher oil prices, increasing demand for dollars from oil-importing countries such as India. That often puts pressure on the domestic currency. Sood said lower crude prices could help ease that pressure by reducing oil-related dollar demand. However, he cautioned that the rupee's trajectory will continue to depend on several factors, including US interest rates, RBI intervention and foreign capital flows. Foreign Investors May Return Foreign portfolio investment remains a key driver of market sentiment. India posted a current account surplus of $4.7 billion in April, supported by strong services exports and remittances. However, foreign portfolio investors withdrew $8.7 billion during the same period, resulting in pressure on the overall balance of payments. Sood said this highlights an important reality for markets. "Strong economic fundamentals help, but investor confidence also matters. Capital flows can significantly influence market performance," he said. Following the easing of geopolitical concerns and the correction in crude prices, foreign investors turned net buyers after an extended selling streak. According to Sood, sectors such as financials, automobiles, infrastructure, logistics, manufacturing and consumer-focused businesses could benefit if foreign inflows strengthen further. Companies Could See Margin Improvement Lower oil prices are also good news for several industries. Aviation, logistics, chemicals, paints, tyres and cement companies are among the sectors that typically benefit when fuel and transportation costs decline. Sood said companies with strong domestic demand and pricing power are often the biggest beneficiaries during such periods. Reduced input costs can improve profitability even if overall demand growth remains moderate. According to Rajat Bokolia, CEO, Newstone, opening of the Strait of Hormuz send a positive signal to India's real estate market as well. "Lower uncertainty around input and logistics costs can help developers plan projects more efficiently, while stronger economic sentiment can improve buyer and investor confidence. Over time, this could lead to increased investments across residential, commercial, and mixed-use developments." Despite the optimism, Sood cautioned against assuming that geopolitical risks have disappeared. The reopening of shipping routes and normalisation of trade conditions will take time. Key issues, including Iran's nuclear programme, still require negotiations. Other global flashpoints also remain on investors' radar, including the Russia-Ukraine conflict, Red Sea security concerns and tensions involving China and Taiwan. For now, however, Sood believes the direction of travel is encouraging. "A durable peace dividend can support lower oil prices, softer inflation, a more stable rupee, stronger corporate earnings and improved investor sentiment," he said. The broader lesson for investors, according to Sood, is that geopolitics has become a permanent factor in market analysis. "War creates risk premiums. Peace removes them. Understanding both sides of that cycle helps investors protect capital and identify opportunities earlier," he added. Track Latest News Live on NDTV.com and get news updates from India and around the world

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Prateek ShuklaBy Prateek Shukla

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US-Iran Peace Deal Live: Iranian President to visit Pakistan on Tuesday as peace talks yield 60-day roadmap

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Advertisement US-Iran peace deal US-Iran Peace Deal Live: Iranian President to visit Pakistan on Tuesday as peace talks yield 60-day roadmap New Delhi,UPDATED: Jun 22, 2026 19:20 IST US-Iran Peace Deal News Live Updates: US-Iran diplomacy gained momentum after a marathon round of talks in Switzerland produced what mediators Pakistan and Qatar described as a roadmap for a final agreement within 60 days.

US Vice President JD Vance said Tehran had agreed to allow nuclear inspectors into the country and work on mechanisms covering frozen Iranian assets, regional ceasefires and the Strait of Hormuz. Vance said discussions on nuclear inspections could begin as early as this week, while technical teams will remain engaged even after Iran's top negotiators returned to Tehran following 18 hours of intensive negotiations.

The talks also established a communication channel to help ensure safe commercial shipping through Strait of Hormuz and a mechanism aimed at preventing renewed fighting in Lebanon between Israel and Hezbollah. Despite the diplomatic progress, tensions remained visible.

Iran had briefly closed the Strait of Hormuz over the weekend, accusing the United States of failing to uphold commitments to halt fighting in Lebanon. However, mediators said discussions were held in a constructive atmosphere and yielded encouraging progress.

Iranian President Masoud Pezeshkian is set to visit Pakistan on Tuesday in a trip expected to focus on bilateral cooperation and follow-up discussions on Islamabad's mediation efforts. Meanwhile, a fragile ceasefire in Lebanon largely held, marking the longest lull in violence in three months of conflict.

Lebanese officials reported near-total adherence to the truce despite isolated incidents, while Israeli leaders insisted any final agreement must ensure Iran cannot use future financial relief to support military activities or regional proxy groups.

Follow IndiaToday.in for the latest updates....Read More Iranian President Masoud Pezeshkian is expected to arrive in Pakistan on a one-day visit on Tuesday. (File Photo: Press TV) 2 Jun 22, 2026 19:20 IST US-Iran Deal: Iranian President to visit Pakistan Iranian President Masoud Pezeshkian will make a one-day visit to Pakistan on Tuesday, Iranian officials said.

Habib Abbasi, director-general of public relations at the presidential office, said the trip will focus on implementing previous agreements and exploring new trade opportunities. Pezeshkian is also expected to "express appreciation" for Pakistan's role in mediating between Iran and the United States, according to Tasnim news agency.

Jun 22, 2026 19:14 IST US-Iran Deal: Here's what happened so far - US Vice President JD Vance said talks with Iran made significant progress, with Tehran agreeing to allow nuclear inspectors, establish mechanisms for handling frozen assets and support efforts to manage regional ceasefires.

- Speaking after negotiations in Switzerland, Vance said discussions on nuclear inspections could begin as early as this week and confirmed that technical talks would continue in the coming days and weeks. - Iran’s senior negotiating team departed Switzerland for Tehran after 18 hours of intensive discussions, while technical experts remained behind to continue work on the Islamabad memorandum of understanding.

- Pakistan and Qatar, which mediated the talks, said Washington and Tehran agreed on a roadmap aimed at reaching a final agreement within 60 days and described the first round of negotiations as encouraging. - The two sides also agreed to establish a mechanism to help prevent clashes in Lebanon and create a communications channel to safeguard commercial shipping through the Strait of Hormuz, a vital route for global oil supplies.

- The talks followed an interim agreement reached last week and continued despite renewed tensions after President Donald Trump threatened military action against Iran and Tehran warned Washington over its rhetoric. - Iranian President Masoud Pezeshkian is scheduled to visit Pakistan on Tuesday for a one-day trip.

Iranian officials said he would discuss bilateral cooperation and express appreciation for Islamabad’s role in facilitating US-Iran diplomacy. - A ceasefire in Lebanon largely held on Monday, marking the longest period of relative calm in nearly three months of conflict between Hezbollah and Israel, although isolated incidents were still reported.

- Lebanese security officials said adherence to the ceasefire had been "almost total" since Saturday evening, despite reports of limited Israeli military activity in southern Lebanon and drone flights over Beirut. - The conflict in Lebanon has remained a major test for the interim US-Iran agreement, with Tehran previously accusing Washington of failing to ensure an end to hostilities and briefly reimposing restrictions in the Strait of Hormuz.

- Vance said progress had also been made toward reducing tensions in Lebanon, while negotiators worked to establish safeguards aimed at preventing future escalation. - Iranian Foreign Minister Abbas Araqchi said Tehran had secured waivers for oil and petrochemical exports, the release of some frozen assets and the launch of a reconstruction and development programme under the broader diplomatic framework.

- Oil prices, which surged after tensions disrupted shipping through the Strait of Hormuz, fell further after the latest round of talks, easing concerns about global supply disruptions. - Pakistani Prime Minister Shehbaz Sharif described the negotiations as constructive and said the first round of talks had concluded successfully, laying the groundwork for a broader peace agreement.

- Israeli officials signalled support for a diplomatic resolution but stressed that any final deal must ensure Iran cannot use financial relief or released assets to fund military activities or regional proxy groups.

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