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The Indian rupee is set to open higher on Wednesday in the run-up to the central bank's policy decision, buoyed by plunging oil prices and the rally in Asian currencies after a two-week Middle East ceasefire.

The rupee is likely to open in the 92.40-92.50 range versus the U.S. dollar, having settled at 93.0075 on Tuesday.

Brent crude June futures plunged nearly 14% to $94.10 a barrel, U.S. equities rallied more than 2%, while South Korean and Japanese shares climbed 6% and 5%, respectively.

U.S. Treasury yields and the dollar index fell, and the South Korean won led the rally in Asian currencies, jumping 1.5%.

A two-week Iran ceasefire agreed by U.S. President Donald Trump on Tuesday boosted risk assets, lifted Asian currencies and dragged oil prices lower.

The ceasefire will be a major relief for markets, which over the past several weeks have had to contend with uncertainty over how long the conflict might drag on and the potential impact on inflation.

The agreement was reached less than two hours before Trump's deadline for Tehran to reopen the Strait of Hormuz or face what he said would be devastating attacks on its civilian infrastructure.

"This is a positive de-escalation signal for markets, especially with Hormuz reopening," said Charu Chanana, chief investment strategist at Saxo, Singapore. 

"From here, the key questions are whether talks keep progressing during this two-week window, how quickly energy flows and shipping activity normalise in practice."

RBI DECISION

The ceasefire is welcome news for oil-importer India, with the Reserve Bank of India's policy decision due at 10 a.m. IST.

The central bank is widely expected to keep rates on hold, with the recent run-up in oil prices stoking inflation concerns. 

The RBI recently tightened curbs on the activity of banks and corporates to manage the fallout from higher oil prices on the rupee. 

The rupee has recovered from levels near 95 per dollar following these steps, and relief from the ceasefire is expected to support it further.