The Indian rupee made a powerful leap forward in early trade Tuesday. It appreciated by a significant 119 paise against the US dollar. This surge followed a major development in international trade relations.
The local currency opened strongly at 90.30 per dollar. This marked a clear gain from its previous close of 91.49. The interbank foreign exchange market reacted immediately to positive news.
The catalyst was the long-awaited US-India trade deal. President Donald Trump announced it after a delay of nearly nine months. Prime Minister Narendra Modi promptly endorsed the agreement.
A key component of the deal involved reduced tariffs. US tariffs on India were cut to 18 percent. This rate is slightly lower than those applied to neighbors Bangladesh and Pakistan.
This tariff change improves India’s relative competitive position. It provides a distinct advantage for Indian exporters in the global market. The shift has fundamentally altered the financial narrative.
Forex traders are viewing this as a game-changer. The new tariff structure reopens the door for Foreign Institutional Investor participation. FIIs may finally return to buying Indian equities after a prolonged selling phase.
Anil Kumar Bhansali of Finrex Treasury Advisors highlighted the impact. He called the trade deal the good news that moved markets overnight. The relative advantage for exporters is a crucial takeaway.
All eyes are now on the Reserve Bank of India. Market participants are waiting to see the RBI’s stance in the coming days. The central bank may need to manage the short dollar position created by this surge.
Meanwhile, the dollar index showed a slight decline. It was trading 0.20 percent lower at 97.43. This measured the greenback’s strength against a basket of six major currencies.
Global oil prices also saw movement. The Brent crude benchmark was trading lower by 0.41 percent. Futures were at $66.03 per barrel during the session.
Domestic equity markets celebrated the news with massive gains. The benchmark Sensex skyrocketed over 2,138 points, a jump of 2.62 percent. It reached an impressive 83,804.54.
The Nifty index followed suit with a strong rally. It was up 607 points, translating to a 2.42 percent gain. The index climbed to 25,695.40, reflecting broad market optimism.
This bullish sentiment comes despite recent foreign investor activity. Foreign Institutional Investors were net sellers just a day prior. They offloaded equities worth Rs 1,832.46 crore on Monday.
The trade deal has clearly injected fresh confidence. The rupee’s appreciation is a direct signal of renewed market faith. This development could mark a turning point for capital flows and currency stability.