India and the EU have finalized a long-term trade deal, both sides said on Tuesday. Over seven years, the European bloc will cut tariffs on 99.5% of traded goods, while the pact will also reduce or eliminate duties on a range of EU goods coming to India, including machinery, electrical equipment and chemicals.The deal follows India finalizing trade deals with Britain, New Zealand and Oman, even as the South Asian country continues to struggle with high tariffs on exports to the US.
On the day, widespread interest in dollar selling helped the rupee rise, traders said.
India’s stock indices, the BSE Sensex and Nifty 50, ended down 0.4% and 0.5% respectively on Tuesday.
Despite the day’s gains, continued overseas selling of local equities – amounting to more than $3.5 billion so far this month – remains a sore point for the currency. Foreign investors withdrew a record net amount of almost $19 billion from the shares last year. In the absence of a reversal in flows, traders and analysts believe that the rupee is unlikely to reverse and a gradual depreciation is likely to continue.
In the short term, the rupee is likely to fluctuate between 91.20 and 92.10, with India’s federal budget announcement on February 1 being the next major signal in focus, said Dilip Parmar, a currency research analyst at HDFC Securities. ,
Elsewhere, the dollar index was little changed at 97.1, while Asian currencies were split between modest gains and losses.
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