Mumbai, February 3 – The Indian rupee staged a remarkable rally on Tuesday, strengthening by more than 1% against the US dollar following the announcement of a landmark trade deal between India and the United States. Trading at 90.29 per dollar, the currency reflected renewed optimism among investors, who are now channeling funds into Indian markets.
The rupee had closed at 91.53 on Monday, marking a significant 48-paise gain in the previous session that pushed it to a two-week high. Market observers noted the Reserve Bank of India’s (RBI) timely intervention in the spot market, which helped stabilize the currency during volatile swings.
Analysts pointed out that the rupee initially surged even higher but settled within the 90.20-91.20 range after failing to breach the 92 mark. This pullback is viewed as a healthy correction rather than a reversal of the upward momentum.
Market experts remain bullish on the rupee’s long-term trajectory, describing the current dip as temporary. Should it slip below 90.50-90.80, further downside could target 90 or even 89.80 levels, they cautioned.
The rupee’s appreciation has tempered gains in gold and silver prices on the MCX, though medium-term prospects for precious metals remain positive amid global uncertainties.
US President Donald Trump confirmed the deal on Monday, revealing that tariffs on Indian goods would be slashed from 50% to 18% after a phone conversation with Prime Minister Narendra Modi. Additionally, India has agreed to reduce oil purchases from Russia and ramp up imports from the US and potentially Venezuela.
This agreement has dissipated market uncertainties, paving the way for increased foreign investment in Indian equities and bonds. Heightened rupee demand is expected, with the RBI’s policy stance playing a pivotal role in the coming days.
Combined with prospective India-EU FTA negotiations and a growth-oriented budget, this trade pact could usher in a surge of foreign capital, bolstering India’s balance of payments and fostering a more robust economic environment.