The rupee strengthened for the third trading session on the trot as crude oil prices dipped due to brightening prospects of the US and Iran reaching a peace deal and central bank support, with RBI Governor Sanjay Malhotra reportedly stating that the rupee may be undervalued.The Indian currency closed 46 paise stronger at 95.23/24 per US dollar against previous close of 95.69/70. It opened 35 paise stronger.The US and Iran are inching close to a peace agreement, brightening the possibility of the arterial Strait of Hormuz being opened up for crude oil trade. Crude oil prices dipped below $100 a barrel to about $96 a barrel, down 6 per cent.RBI Governor Sanjay Malhotra, in an interview with Mint, said the rupee is not overvalued and may, in fact, be undervalued after the recent depreciation. He also emphasised that the RBI does not target any specific exchange rate level and would intervene only to curb abnormal and high volatility or undue speculation.Referring to the rupee gaining ground, Madan Sabnavis, Chief Economist, Bank of Baroda, observed that the credit for this goes to the RBI for some strong statements made – the most significant being that the rupee may actually be undervalued rather than overvalued due to this successive depreciation witnessed of late.“This along with the assurance given on intervention if required has cooled the markets on Monday morning along with of course the price of crude coming down.“Will this continue? We need to wait and see as it is hard to take a view here. The next few days will tell us more on the possible stability in the rupee,” said Sabnavis.Published on May 25, 2026