Indian Rupee Rebounds on US Tariff Slash

2026-02-02 18:04 By Andre Joaquim 1 min. read

The Indian rupee strengthened to around 90.3 per USD, rebounding from the record-low of 92 touched on January 28th after the US lowered their tariffs against India.

US President Trump and Indian Prime Minister Modi agreed to a deal that would cut tariffs on Indian goods to 18% from 50%, while also removing an extra 25% duty imposed earlier in response to India’s Russian oil purchases, following Modi’s pledge that India would stop purchasing Russian oil.

The moves were set to improve the export outlook for Indian textiles, machinery, and raw materials that are commonly shipped to the US, taming the imbalance in forex flows to India that pressured the currency in recent quarters.

The rupee reached a record low last week as the rebound in oil prices increased domestic dollar demand for major energy importers.

This was then magnified by the record-setting INR 17.2 trillion in borrowing penned in the new federal budget.



News Stream
Rupee Set for Sharp Weekly Rise
The Indian rupee steadied around 92.9 per USD, holding its recent gains in thin holiday trading, but headed for a sharp weekly rise amid tighter measures by the central bank to curb speculative bets. The rally has been underpinned by a series of Reserve Bank actions to restrict speculative FX trading, including curbs on forward transactions and tighter limits on banks’ foreign exchange positions. These steps have triggered dollar selling in the onshore market and helped support the rupee, while also tightening hedging conditions and widening gaps with offshore pricing. Elsewhere, hopes that the Strait of Hormuz would partially reopen supported sentiment. Iran and Oman are said to be developing a protocol to “monitor transit” through the strategic waterway, a move aimed at easing regional tensions. India and other countries are also actively negotiating with Tehran to ensure the safe passage of vessels, while also forming small diplomatic circles and exploring barter-style agreements.
2026-04-03
Rupee Falls on Outflows, Trump Speech
The Indian rupee edged down to around 93.2 per dollar, extending gains for another session amid persistent capital outflows and heightened geopolitical tensions. The currency has been under pressure from spillovers of the Iran war, prompting the Reserve Bank of India to step up measures against arbitrage and forward contract manipulation. After an earlier crackdown on banks failed to ease volatility, corporates were barred from rebooking cancelled foreign exchange contracts, and derivative trades with related parties were restricted. Analysts noted that while these measures aim to curb speculative activity, the rupee remains vulnerable as oil prices stay elevated and capital inflows remain limited. Adding to the downward pressure, President Donald Trump’s 20-minute prime-time address said the US is “very close” to completing its military objectives in Iran, while warning of potential escalation.
2026-04-02
Rupee Slips Amid Outflows, High Oil Prices
The Indian rupee slipped to around 93.5 per dollar, retreating after a brief stabilization as persistent geopolitical tensions and elevated oil prices continued to weigh on the currency. Although hopes have emerged that the conflict may end soon following statements from Donald Trump, lingering uncertainties are keeping investors cautious. March saw global funds withdraw around $12 billion from Indian equities, the steepest monthly outflow on record. Brent crude, up 44% since February, could climb further if the Strait of Hormuz remains effectively closed, adding to currency pressures. Analysts warn that if the conflict in Iran persists, the rupee could weaken to 100 per dollar or beyond, despite recent measures by the Reserve Bank of India to curb its roughly 10% decline over the past year. Market positioning remains bearish, with options pricing indicating roughly a 13% chance of the rupee reaching 100 by June and a 41% probability by year-end.
2026-04-01