The Indian rupee surged to its biggest one-day gain in over seven years after the India–US trade deal reduced reciprocal tariffs to 18%.
Improved risk sentiment and hopes of foreign inflows lifted the currency, with equities also rallying on the announcement.
Analysts warned the rupee’s gains may be short-lived as details of the deal, RBI reserve accumulation and global risks remain key overhangs.
Rupee Soars on India–US Trade Deal; Posts Largest Gains in Over 7 Years
The rupee posted its sharpest single-day gain in over seven years after the India–US trade deal announcement lifted risk sentiment, even as analysts urged caution pending details
Indian Rupee rbi
Summary
Advertisement
The Indian rupee rose sharply against the dollar on Tuesday to post its biggest single-day gains in over seven years after the announcement of the India–US trade deal. On Monday, US President Donald Trump announced that reciprocal tariffs on India have been reduced to 18% and that Washington has sealed the deal with New Delhi. Soon after Trump’s announcement on Truth Social, Prime Minister Narendra Modi followed through on X, announcing the same.
“Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25 percent to 18 percent,” Trump wrote in a post.
As per Trump’s claims, New Delhi has also agreed to halt imports of Russian crude and lower trade barriers. An official document detailing the deal is yet to be released.
Advertisement
“With the trade deal done and tariffs reduced, the initial euphoria has allowed the rupee to appreciate up to 90.22 per dollar, but for now we await the finer details, particularly on the $500 billion imports which Trump has said India has promised,” Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP, said in a note. “Knowing Trump, he may change his stance, so we have to be on guard all the time.”
The rupee’s rebound to hit a near three-week high comes just days after the Indian currency touched its lifetime low of ₹91.98 per dollar, driven by foreign fund outflows and importers’ dollar purchases. Indian equities also rallied during the day, with the benchmark Nifty 50 index rising 2.5%.
According to market participants, the outlook for the domestic currency was lifted by the announcement of the trade deal. As per a report by Nomura, improved risk appetite among investors could attract foreign capital, though support for the rupee may be short-lived. “RBI FX reserve accumulation, US product purchases and global risk markets will likely continue to weigh on INR,” the report said.
Advertisement