Rupee Surges 119 Paise After India-U.S. Trade Deal Boost

The Indian rupee experienced a significant increase in early trading on Tuesday, February 3, 2026, rising by 119 paise to reach 90.30 against the U.S. dollar. This surge followed the announcement by the United States of a substantial reduction in tariffs on Indian goods, lowering them from 50% to 18% as part of the long-anticipated India-U.S. trade deal.

In the interbank foreign exchange market, the rupee opened strong at 90.30, making a notable gain from its previous close of 91.49. Forex traders indicated that the tariff cut has improved India’s trade position and reignited hopes for increased foreign investment in the country.

Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, commented on the development, stating that the trade deal is a positive signal for Indian markets. He noted that the agreement, which was announced after nearly nine months of delays by U.S. President Donald Trump and endorsed by Prime Minister Narendra Modi, provides Indian exporters with an advantage over neighboring countries like Bangladesh and Pakistan, where tariffs remain slightly higher.

According to Bhansali, the improved trade environment could lead Foreign Institutional Investors (FIIs) to return to Indian equities after a prolonged selling period. However, he cautioned that market participants would closely monitor the Reserve Bank of India’s actions in the coming days, as the central bank may need to manage short dollar positions in the market.

Additionally, the U.S. dollar index, which measures the dollar’s strength against a basket of six major currencies, was trading 0.20% lower at 97.43, further supporting the rupee’s gains. Global crude oil prices also declined, with Brent crude, the international oil benchmark, trading 0.41% lower at $66.03 per barrel in futures, providing some relief to oil-importing countries like India.

On the domestic equity front, markets reacted positively to the news of the trade deal. The BSE Sensex surged by 2,138.08 points, or 2.62%, reaching 83,804.54, while the NSE Nifty also saw a sharp rise, gaining 607 points, or 2.42%, to reach 25,695.40.

Despite this positive momentum, exchange data revealed that Foreign Institutional Investors had sold off equities worth ₹1,832.46 crore on Monday, February 2, 2026. Analysts believe that the latest trade agreement could help reverse this trend in the upcoming sessions.