Rupee rises to highest level in three weeks on India-US trade deal

Trade deal impact on rupee

• Indian rupee hits 3-week high after India-US trade deal, biggest gain in 3 years
• US cuts tariffs on Indian exports to 18%, boosting trade and market sentiment
• Sensex and Nifty surged over 2.5 percent after the trade agreement announcement

Did our AI summary help?

Indian rupee saw a strong appreciation today, rising to a three-week high of Rs 90.27 against the US dollar after India and US concluded their much-awaited trade deal.

The Nifty posted its best one-day gain since May 2025, while the rupee logged its best rally in more than seven years.

This comes after the Indian currency depreciated strongly recently, amid macroeconomic uncertainties and tariff pressures.

“The Indian Rupee has remained relatively weak versus Asian peers, reflecting its use as a policy buffer during recent trade tensions with the US. With inflation contained, currency weakness could be tolerated without significant imported inflation, leaving the Rupee trading at a valuation discount driven largely by risk perception,” said Anindya Banerjee, Head Currency and Commodity Research, Kotak Securities.

The analyst added that the recent trade agreement and tariff reduction to 18 percent open the door for modest appreciation, but the pace and extent will depend on RBI intervention thresholds, given the priority of maintaining export competitiveness.

“With the rupee having weakened nearly 5% over the past six months, improved trade flows and renewed foreign investor interest could support a partial currency recovery. As relative attractiveness shifts back toward India from ASEAN markets, a reversal of recent FII outflows could further strengthen Indian equity markets. This is a win-win news for everyone,” said Nachiketa Sawrikar, Fund Manager, Artha Bharat Global Multiplier Fund.

India-US trade deal:

The bilateral trade deal effectively reduces US tariffs on Indian exports to 18 percent from 50 percent. "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 on Truth Social after a telephonic conversation with Prime Minister Narendra Modi.

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.

Markets rallied after the deal announcement. Sensex was up 2.5 percent at 83,739.13, while Nifty 50 gained 2.55 percent to 25,727.55.

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