Finance Minister Nirmala Sitharaman emphasized the government's commitment to maintaining a strong rupee during her first post-budget interview with Network18 Editor-in-Chief Rahul Joshi. According to reports from Moneycontrol, the minister stated that 'Our party was in favor of and is still in favor of always a strong rupee' while acknowledging realistic economic challenges. Sitharaman explained that while the economy faces high inflation and fragility, the rupee's current position makes it difficult for everyone, but 'the economy is final fit'. The latest developments come as the India-US trade deal announcement has injected fresh optimism into Dalal Street, marking one of the strongest single-day rallies in recent months.
In her Budget 2026 announcement, Sitharaman introduced significant changes to foreign investment rules that could boost foreign portfolio investor inflows. As reported by Moneycontrol, the finance minister announced that individuals living out of India can now invest in equities through the Portfolio Investment Scheme, with higher caps in place. This development could enable foreign investors to allocate more of their portfolios to Indian companies and further enhance foreign portfolio investor (FPI) inflows, which have moderated in recent months. The positive market response to the trade deal announcement has further strengthened investor confidence in India's economic prospects.
The Indian rupee opened higher on February 2, a day after Union Budget 2026 was presented, as investor sentiment turned positive. According to Moneycontrol, the positive response was attributed to announcements pertaining to foreign institutional and portfolio investors. The latest India-US trade deal, with tariffs reduced to 18% from 25%, has delivered immediate market boost and reaffirmed the market's sensitivity to global trade cues. The finance minister noted that 'Your macroeconomic fundamentals are strong' and that banks are closely monitoring the situation, while acknowledging that the government is not indifferent to the rupee-dollar exchange rate.
The currency developments occurred against a backdrop of global economic shifts, with the US dollar strengthening after President Donald Trump announced the appointment of new Federal Reserve Chair Kevin Warsh. As reported by Moneycontrol, Warsh has been perceived as more hawkish by market participants, contributing to dollar strength. The India-US trade deal announcement has sparked rally in export-oriented sectors as India-US trade deal eases uncertainty. With the budget out of the way, market participants are now looking forward to the monetary policy committee meeting on Friday, where it is expected that the RBI will keep rates steady according to a previous Moneycontrol poll.