Rupee Jumps Over 1% to 90.30 After India-U.S. Trade Deal Announcement

The Indian rupee appreciated more than 1% to 90.30 against the U.S. dollar on February 03 after India and the United States announced a bilateral trade deal that included tariff reductions and energy-related commitments, according to market data.

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The local currency strengthened sharply from its previous close of 91.5363 on Monday, marking one of its strongest single-day gains in recent sessions. The move followed a late-night announcement by Prime Minister Narendra Modi and U.S. President Donald Trump outlining key trade measures between the two countries.

Trade Deal Lifts Sentiment

U.S. President Donald Trump said on February 02 that the United States had reached a trade agreement with India after a phone conversation with Prime Minister Narendra Modi. Under the agreement, reciprocal tariffs on Indian goods exported to the U.S. were reduced to 18% from 25%.
The tariff reduction applies to a broad set of Indian exports and was announced publicly by both leaders. The announcement triggered positive sentiment in domestic financial markets, contributing to the rupee’s sharp appreciation during early trade on February 03.

Energy Commitments Announced

As part of the same announcement, Prime Minister Narendra Modi agreed that India would stop purchasing crude oil from Russia and increase oil imports from the United States. The statement also mentioned the possibility of sourcing crude oil from Venezuela.
The energy-related commitments were outlined alongside the tariff announcement and were presented as part of broader trade and economic cooperation between India and the U.S.

Recent Currency Movement

The rupee had already shown signs of recovery in the previous trading session. On Monday, the local currency gained around 48 paise to reach a two-week high after closing at 91.5363 against the U.S. dollar.
The prior session’s gains came after the Reserve Bank of India intervened in the spot foreign exchange market, as per market data, following recent weakness in the currency.
The February 03 opening extended that momentum, with the rupee strengthening past the 91 mark and trading at 90.30 in the early hours.

Effect of Lowering Tariffs

The fact that the U.S. has lowered tariffs on Indian goods from 25% to 18% is a big change in the way the two countries trade with each other. The two governments reached an agreement that included lowering the tariff rate. According to official announcements, this change should take effect right away.
As part of talks between the two countries to improve trade relations and settle long-standing tariff issues, the tariffs have been lowered.

Market Context

The rupee’s sharp move comes after a period of volatility in the foreign exchange market, during which the currency had faced pressure due to global factors and capital outflows. The announcement of the trade deal provided a clear directional trigger during the session.
The strengthening of the rupee on February 03 reflects the immediate market response to the confirmed policy developments announced by both governments.

Things to Keep an Eye On

After the trade agreement was made public and the rupee rose sharply, market players will keep an eye on official announcements about when the new tariffs and energy sourcing plans will go into effect.
The change in the exchange rate on February 3 shows how the rupee reacts to official policies and trade agreements between the two countries. More information will come out in the next few days as the agreement is put into action.