Indian Rupee Hits Over 3-Week High on RBI Rate Hold

The Indian rupee rose to around 90.2 per dollar, extending gains to its strongest level in over three weeks as the central bank signaled continued policy stability. The Reserve Bank of India kept its key repo rate unchanged at 5.25%, in line with expectations. The hold reflects confidence in a softer inflation outlook and reassures markets that accommodative conditions will persist. The currency also continues to receive support from residual optimism over the US-India trade deal, which reduces US tariffs on Indian imports from nearly 50% to 18%, while protecting agricultural and key export sectors. At the same time, one-off dollar sales and relatively light market positioning further lifted the rupee, despite external headwinds and a fragile risk environment. Analysts note that near-term movements will continue to hinge on global risk sentiment, capital flows, and clarity around trade deal implementation, as well as the Budget session.

The Indian rupee rose to around 90.3 per dollar, extending gains to its strongest level in over three weeks amid moderated corporate dollar activity. Corporate flows continued to influence the currency, while easing forward premiums and increased exporter hedging have helped temper near-term depreciation pressures. Additionally, the currency continues to draw some support from the recent US-India trade deal, which cuts US tariffs on Indian goods from 50% to 18% while maintaining protections for certain agricultural products. Key details, including timelines, product coverage, and enforceability, have yet to be confirmed. Analysts say the deal underpins Indian assets, though sustained gains will depend on clarity around implementation and broader capital flows. Investors remain cautious ahead of developments in the Budget session and the Reserve Bank of India’s policy announcement later today.

The Indian rupee edged lower to around 90.4 per dollar, pausing gains from the previous session amid corporate dollar buying. Corporates stepped up dollar purchases to hedge import costs and other overseas obligations. At the same time, investors continue to monitor developments in the Budget session and the Reserve Bank of India’s $10 billion 3-year dollar-rupee swap, which influence liquidity and trading activity. Meanwhile, the currency continues to receive some support from the US-India trade deal, which reduces US tariffs on Indian goods from 50% to 18% while retaining protections for certain agricultural imports. Key details, including timelines, product coverage, and enforceability, remain unconfirmed. Analysts note the deal supports exports in textiles, apparel, and industrial goods, though India’s trade deficit may limit immediate rupee gains. The RBI is expected to maintain its policy repo rate at 5.25% after 125 bps of cuts in 2025.