Indian Rupee Opens Sharply Higher At 90.40 Vs US Dollar

Indian Rupee Vs USD: The Indian rupee appreciated by about 1.10 against the US dollar on Tuesday, February 3, as optimism returned to currency markets. In early trade, the rupee hovered near the 90.40-per-dollar

mark, signaling a sharp rebound after a phase of sustained weakness.

According to analysts, the recovery is being fuelled by expectations that the recent India–US trade agreement could improve investor sentiment and attract fresh foreign portfolio inflows. The pact has lowered steep tariffs on Indian exports, removing a major overhang that had been weighing on the currency outlook.

Backdrop to the earlier slide:
The rupee had emerged as the worst-performing Asian currency in 2025, declining nearly 5% over the year and over 2% in January alone. Tepid foreign inflows and strong dollar demand from importers had added to depreciation pressures.

How the trade deal could help:

With tariff-related uncertainty easing, currency strategists believe capital flows may stabilise, hedging pressures could moderate, and speculative bets against the rupee may cool — all of which can lend support to the domestic unit in the near to medium term.

Also, easing tariff worries is likely to enhance India’s export competitiveness and lower policy-related uncertainty for markets.

Marc Velan, Head of Investments at Lucerne Asset Management, said that a reduction in tariff uncertainty could lift near-term sentiment for the rupee and domestic equities by strengthening investor confidence. MUFG Bank added that although foreign inflows have been slow so far, the trade agreement could offer medium-term support to the currency.

Impact on corporate hedging:
In recent months, importers had stepped up forward dollar buying to shield themselves from further rupee weakness, while exporters held back on hedging, leading to a mismatch that intensified pressure on the currency.

With tariff concerns receding, analysts believe this imbalance should gradually ease, helping restore a more balanced demand–supply equation in the forex market. Traders also expect speculative bearish positions on the rupee to cool, which may further aid its recovery. However, the durability of these gains will hinge on actual foreign fund inflows and overall market sentiment in the days ahead.