Mumbai, May 25 (PTI) The rupee appreciated 34 paise to close at 95.26 against the US dollar on Monday, registering the third straight session of gain, on optimism that the US and Iran were moving close to a peace deal even though they remained at odds over key issues, including blockades on the Strait of Hormuz.

Forex traders said the rupee registered its third straight session of gain after RBI Governor Sanjay Malhotra, in a media interaction, said that the central bank will do "whatever is required" to ensure orderly price discovery in the forex market.

The Indian rupee is not overvalued and may, in fact, be undervalued after its recent depreciation, the RBI governor said in an interview with Mint.

At the interbank foreign exchange market, the rupee opened at 95.36 against the US dollar, then touched an intraday high of 95.12 and a low of 95.44 during the trade.

At the end of Monday's trading session, the rupee was quoted at 95.26, higher by 34 paise from its previous close.

On Friday, the rupee rose 75 paise to close at 95.60 against the US dollar.

According to traders, the rupee traded on a positive note after US President Donald Trump said the US and Iran have "largely negotiated" a peace pact to end the nearly three-month war, asserting that he has told the negotiators "not to rush into a deal" and that "both sides must take their time and get it right." Moreover, US Secretary of State Marco Rubio has said the US and India are on the verge of finalising an interim trade agreement.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 99.98, down 0.26 per cent.

Brent crude, the global oil benchmark, was trading down 5.10 per cent at USD 98.26 per barrel in futures trade.

On the domestic equity market front, Sensex jumped 1,073.61 points to settle at 76,488.96, while the Nifty surged 312.40 points to 24,031.70.

Foreign institutional investors turned net buyers and purchased equities worth Rs 821.75 crore on Monday, according to exchange data.

Meanwhile, the country's forex reserves dropped USD 8.094 billion to USD 688.894 billion during the week ended May 15, the Reserve Bank of India (RBI) said on Friday. In the preceding week ending May 8, the overall reserves had jumped by USD 6.295 billion to USD 696.988 billion. PTI DRR HVA