Rupee posts best day in seven years on India-US trade deal; further gains depend on RBI intervention

The Indian rupee rose 125 paise on Tuesday after the announcement of the US-India trade deal lifted sentiment on the currency and recorded its best day in seven years, LSEG data said. The rupee closed at 90.26/$, compared to the previous close of 91.51/$1, unable to move above 90/$1 due to the presence of the Reserve Bank of India.The central bank bought dollars around noon on Tuesday, after several months of selling dollars to limit the depreciation.

The rupee traded in the range of 90.04/$1 and 90.51/$1 on Tuesday, with foreign portfolio investors buying Rs 4,900 crores so far in February. The finance ministers expect a further capital injection from foreign players after the trade deal.

“The trade bill outlook does not change much as both countries would benefit from lower duties, but capital flows could see an improvement as the deal improves overall sentiment. Foreign capital, which has been sidelined in the past few months, could start returning, leading to inflows in both equity and debt markets,” said Shailendra Jhingan, head of finance at ICICI Bank.

Jhingan expects the rupee to trade between 90/$1 and 89.50/$1 by the end of March.

Dealers said the market will be closely watching the extent to which the RBI will allow the local currency to strengthen in the coming days. The RBI has intervened to prevent the rupee from falling beyond the psychologically significant level of 92/$1, increasing short positions. RBI’s short positions amount to $62.3 billion as of December 2025

“The RBI bought at 90.05 levels and they (RBI) may want to widen their futures portfolio as their short positions are large. There are many details of the trade deal that are uncertain, and that is why we now have a stop loss at 90.75/$1,” said Anil Bhansali, head of finance at Finrex Treasury Advisors. Trading volumes on Tuesday were not unusually high as traders await more details on the deal.

“While importer participation was expected, actual flows remained muted. Exporters, meanwhile, remained on the sidelines amid relatively strong rupee levels. Further details on the trade front may be needed on bilateral trade elements and also any commentary on Russian oil imports from India would provide firm direction for the rupee. For USDINR, the 89.50 levels are acting as support, while 91.20 is now acting as resistance.” said Kunal Sodhani, Head of Finance at Shinhan Bank India.