Rupee Sees Sharpest Single-Day Gain in Months After India–US Trade Agreement

The Indian rupee strengthened by about 1% against the US dollar on Tuesday after India and the United States announced a bilateral trade agreement, easing concerns over tariffs that had weighed on the currency in recent weeks.

The rupee moved to around ₹90.30–₹90.40 per dollar in early trade, compared with its previous close near ₹91.50, marking one of its strongest single-session gains in recent months.

Market participants attributed the move to improved risk sentiment following confirmation that proposed US tariffs on Indian goods would be lowered, reducing uncertainty for exporters and foreign investors.

Dollar Weakens as Risk Appetite Improves

The rupee’s rise coincided with a softer US dollar across Asian markets, as traders reduced defensive positions taken during the period of heightened trade tension.

Demand for dollars eased at the interbank level, while inflows into domestic equities supported the local currency. The rupee also benefited from gains across other emerging market currencies during the session.

Also read: Dalal Street Roars As Sensex Surges Over 3,600 Points, Nifty Jumps 4.8%

Equity Markets Surge Across Sectors

Indian equity benchmarks rallied sharply alongside the currency.

The Sensex jumped more than 3,000 points intraday, while the Nifty 50 climbed close to 4–5%, adding significant market capitalisation in a single session.

Gains were broad-based, with strong buying seen in:

• Export-oriented stocks
• Automobiles and auto components
• Metals and capital goods
• Information technology shares

Investors responded positively to the reduced risk of trade disruptions and improved visibility for globally linked sectors.

Bond Market Stable, Yields Edge Lower

In the government bond market, yields were largely steady with a slight downward bias.

The benchmark 10-year government bond yield eased by a few basis points to trade near 6.70–6.75%, reflecting improved sentiment but continued caution ahead of further clarity on trade implementation and global rate trends.

Focus Shifts to Capital Flows and Follow-Through

Market participants said attention would now turn to foreign portfolio investment flows and official communication from both governments on the scope and timelines of the trade agreement.

While the immediate reaction across assets has been positive, traders noted that currency and equity movements will depend on whether the agreement translates into sustained policy stability.

Also read: Jeffrey Sachs: US–India Trade Reset Shows American Weakness, Not Power