The Indian rupee strengthened by over 1% against the US dollar, trading at 90.29, buoyed by optimism following an India-US trade agreement. This surge came after the rupee closed at 91.53 on Monday, marking a two-week high and gaining 48 paise due to reported intervention by the Reserve Bank of India. Analysts noted that the rupee’s rise against the dollar was significant before stabilizing within the 90.20–91.20 range, with a corrective pullback observed after failing to sustain levels above 92.
Market participants highlighted that the recent pullback in the rupee’s value was corrective in nature, maintaining a broader higher-high, higher-low structure on longer time frames. Technical analysts indicated that the near-term outlook for the rupee remained positive, with a potential downside opening up if levels below 90.50–90.80 were breached, leading to a target range of 90–89.80. While a softer dollar-rupee rate was limiting gains in MCX bullion, the medium-term outlook for precious metals was still supportive.
US President Donald Trump’s announcement of a trade agreement with India, which involved reducing reciprocal tariffs on Indian goods from 25% to 18%, contributed to the positive sentiment. This agreement, following a discussion with Prime Minister Narendra Modi, also reportedly included India’s commitment to decrease Russian oil purchases and increase imports from the US and possibly Venezuela. Analysts suggested that the reduced trade uncertainty post the US-India deal could attract foreign investments into Indian markets, potentially bolstering demand for the rupee. However, market participants remained cautious, awaiting the Reserve Bank’s stance in upcoming sessions.
The convergence of the US-India trade pact, the EU-India trade agreement, and the growth-oriented Budget was anticipated to uplift market sentiments and stimulate immediate foreign capital inflows, potentially impacting India’s Balance of Payments (BoP) position.
