The Indian currency delivered a stellar performance on Tuesday, climbing more than 1% to 90.29 against the dollar, propelled by the India-US trade breakthrough. Investors’ faith in India’s growth story has been revitalized, spurring capital inflows.
From Monday’s 91.53 finish, the rupee had already notched a 48-paise rise to a fortnight’s peak, aided by RBI interventions that steadied spot market turbulence.
It flirted with loftier levels initially before ranging 90.20-91.20. The failure to hold above 92 triggered a modest pullback, interpreted by experts as routine consolidation.
Insiders predict the rupee’s dip is fleeting, maintaining a robust outlook. Dips under 90.50-90.80 could extend to 90 or 89.80, but the momentum favors bulls.
A firmer rupee has capped upside in MCX gold and silver, though positive medium-term drivers persist for these assets.
In a Monday disclosure, President Trump detailed the accord post his call with PM Modi: Indian goods tariffs drop from 50% to 18%, with India pledging less Russian oil and more from the US and Venezuela.
This clarity slashes uncertainties, inviting FPIs to pile into Indian shares and bonds, boosting rupee demand. The central bank’s responses will shape the path ahead.
Synergies from India-EU FTA prospects and developmental fiscal measures could accelerate forex reserves growth, fortifying the balance of payments and signaling stronger macroeconomic health.