In a boost to India’s economy, the rupee appreciated over 1% versus the dollar on Tuesday, hitting 90.29 amid celebrations over a fresh trade agreement with the United States. The deal has ignited investor confidence, drawing foreign flows back to Indian shores.
Monday’s close stood at 91.53, following a sharp 48-paise recovery that marked the rupee’s strongest level in two weeks. The RBI’s strategic moves in the spot market were credited for curbing excessive volatility during the upswing.
Early peaks saw the rupee test higher grounds, but it later consolidated between 90.20 and 91.20. Unable to sustain above 92, a minor retreat ensued, which traders attribute to natural profit-taking.
Sentiment in trading circles suggests this softening is short-lived, with the rupee’s broader uptrend intact. A breach below 90.50-90.80 might invite tests at 90 or 89.80, but optimism prevails.
Gold and silver futures on MCX showed muted advances due to the stronger rupee, yet analysts foresee sustained bullishness in precious metals over the medium term.
President Trump announced the pact after discussions with PM Modi, highlighting a tariff cut on Indian exports from 50% to 18%. India will also dial back Russian oil imports in favor of increased sourcing from America and possibly Venezuela.
By reducing trade frictions, the deal opens floodgates for foreign portfolio investments into stocks and debt markets, likely amplifying rupee strength. RBI’s watchful eye will be crucial moving forward.
With India-EU free trade talks and a pro-growth budget on the horizon, these developments promise a capital influx that could significantly improve India’s current account dynamics and economic stability.