Rupee Surges 124 Paise to 90.27 After India-US Trade Breakthrough

The Indian rupee recorded its strongest single-day gain in over seven years, rising by 1.36% to settle at ₹90.27 against the US dollar on Tuesday, February 3, 2026. The rally was driven by renewed investor optimism following the announcement of a landmark India-US trade agreement.

On Monday, US President Donald Trump confirmed the deal, which includes a significant reduction in reciprocal tariffs on Indian goods — down from 50% to 18%.

Market Reaction & Currency Movement

The rupee appreciated by 124 paise, rebounding from its previous close of ₹91.51. Analysts called it a historic rally, the biggest since December 2018.

Dilip Parmar of HDFC Securities noted that the agreement lifted geopolitical uncertainty and boosted sentiment, paving the way for stronger trade flows and foreign investment.

Background: Tariff Tensions & Currency Weakness

In August 2025, the US had raised tariffs on Indian goods to 50%, including a 25% penalty linked to India’s Russian oil imports. This led to sustained rupee weakness throughout 2025, with the currency depreciating nearly 5% over the year.

Foreign portfolio investors (FPIs) pulled out ₹1.66 lakh crore in 2025 and have already offloaded ₹34,056 crore worth of domestic shares in 2026.

Expert Views on Rupee Outlook

Anindya Banerjee of Kotak Securities said the rupee had underperformed Asian peers due to its role as a policy buffer during trade tensions. With inflation under control, currency softness was tolerated.

He added that the new trade deal opens the door for appreciation, though the pace will depend on RBI’s intervention strategy and the need to maintain export competitiveness.

Jateen Trivedi of LKP Securities identified ₹89.90 as immediate resistance and ₹90.50 as key support. He expects the rupee to remain strong if global sentiment and capital inflows hold steady.

Forecasts Ahead

HDFC Bank economists project the rupee to trade between ₹89–₹91.50 this quarter, supported by seasonal inflows and the trade deal. For FY27, they estimate a range of ₹90–₹92, factoring in a gradual depreciation trend.