The Indian rupee opened on a weak note on Wednesday, slipping 22 paise to 90.54 against the US dollar, according to The Hindu BusinessLine. This decline came after the currency recorded a strong performance on Tuesday, soaring 117 paise, or 1.28%, to settle at 90.32 against the dollar. The previous session's rally had positioned the rupee as Asia's best performing currency following the India-US trade agreement announcement. At the interbank foreign exchange market, the rupee opened at 90.35 against the US dollar before losing ground to reach 90.54. As reported by The Hindu BusinessLine, the rupee's depreciation followed a sharp rally after India and the US agreed to a trade deal, with the currency emerging as the best-performing Asian currency in a single trading session.
As reported by The Hindu BusinessLine, the currency's strong performance was driven by the India-US trade agreement, which saw the US lowering reciprocal tariffs on Indian goods to 18%. This rate is lower than those applicable to countries such as China, Bangladesh and Vietnam. Prime Minister Narendra Modi called the agreement a 'big decision' that would benefit everyone in the country, adding that his government consistently works in the national interest. However, forex traders noted that despite the positive sentiment post the India-US trade deal, caution still remains as there is no signed or officially released trade agreement yet - no framework text or final documentation has been made public. According to The Hindu BusinessLine, forex traders said investors are trading with caution as the India-US trade deal still awaits formalisation.
According to The Hindu BusinessLine, the rupee's rally was supported by Dalal Street's strong performance, which gained about 2.7%. The momentum was also backed by softer crude oil prices and expectations of foreign inflows. However, forex traders said investors are trading with caution as the India-US trade deal still awaits formalisation. As Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, explained to The Hindu BusinessLine, "After Tuesday's good news the rupee was back to its own self of weakening as RBI bought dollars towards the end to take the dollar up to 90.2650." As CR Forex Advisors MD Amit Pabari noted, "Any sustained turnaround in FII flows will depend on greater clarity around the final structure and commitments within the deal."
As reported by The Hindu BusinessLine, the dollar index, which tracks the US currency against six major peers, was trading 0.02% lower at 97.41. Brent crude, the global oil benchmark, was trading higher by 0.65% at $67.77 per barrel in futures trade. The currency had climbed to its strongest level in nearly two-and-a-half weeks during the previous session's rally. Meanwhile, on the domestic equity market front, Sensex advanced 68.49 points to 83,816.96 in early trade, while the Nifty was up 51.90 points to 25,779.45. According to The Hindu BusinessLine, Foreign Institutional Investors purchased equities worth ₹5,236.28 crore on Tuesday, according to exchange data.
According to The Hindu BusinessLine, President Trump stated that India will end purchases of Russian crude over an undefined timeline, while increasing imports of U.S. energy, including oil and coal, and potentially Venezuelan crude with U.S. approval. CR Forex Advisors MD Amit Pabari noted that "Moving away from discounted Russian oil could prove challenging for India, given its long-standing commercial and strategic ties with Moscow, and may have implications for India's energy costs and external balance." He added that "Any sustained turnaround in FII flows will depend on greater clarity around the final structure and commitments within the deal." According to The Hindu BusinessLine, Pabari noted that "Ultimately, the directional cue for the rupee will hinge on confirmation of the final trade agreement and its specifics. That clarity will determine whether this move extends — or pauses for consolidation." The 89.80–90.00 zone should act as strong support for the rupee, according to market analysts.