INR poised to rebound below 90/USD as Trump cuts reciprocal tariffs on India

Indian Rupee

• US and India agree to lower reciprocal tariffs from 25 percent to 18 percent
• Indian rupee gains 48 paise after trade deal, highest single-day rise in 6 weeks
• India to stop buying Russian oil, increase purchases from US and Venezuela

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The sharp depreciation of the currency after the announcement of the tariffs by the US is expected to pause after the US President Donald Trump on Sunday announced a trade deal with India that includes a significant reduction in reciprocal tariffs on Indian goods, lowering the rate from 25 percent to 18 percent, following a phone conversation with Prime Minister Narendra Modi.

The currency is likely to trade in the below 90 levels after the announcement of this deal and there is also speculation that the flows in the equity as well as debt market will come in as uncertainty is reduced.

On February 2, the local currency appreciated around 48 paise, which was highest sigle day gain in over six weeks. The local currency ended at 91.5363 against the US dollar, as compared to 91.9900 against the greenback at previous close.

The rupee gained 48 paise on February 2 -- the highest level since December 19, 2025 -- when it appreciated 60 paise in a single day. In percentage terms, it is up 0.52 percent, compared to previous close.

The gain in the domestic currency was due to timely intervention by the Reserve Bank of India (RBI) in the spot forex market.

Sharing details of the call on Truth Social, Trump said, “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 described Modi as “one of my greatest friends” and a “powerful and respected leader of his country,” adding that the two leaders discussed trade, global security and efforts to end the Russia Ukraine war.

According to the US President, Prime Minister Modi also agreed that India would stop buying Russian oil and instead increase purchases from the United States and potentially Venezuela. Trump claimed the move would help bring an end to the war in Ukraine, which he said was “taking place right now, with thousands of people dying each and every week.”

Prime Minister Narendra Modi had tweeted on X that Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement.

“When two large economies and the world’s largest democracies work together, it benefits our people and unlocks immense opportunities for mutually beneficial cooperation. President Trump’s leadership is vital for global peace, stability, and prosperity. India fully supports his efforts for peace. I look forward to working closely with him to take our partnership to unprecedented heights,” Modi added.