The Indian rupee strengthened by 21 paise to reach 90.44 against the US dollar in early trade on Monday, buoyed by the announcement of a framework for an interim trade pact between India and the United States. Although the currency initially opened slightly lower at 90.66, it quickly regained momentum following the news that both nations agreed to reduce import duties on various goods to stimulate two-way commerce. Positive domestic equities and a retreating dollar index further supported investor confidence.
Under the mutually agreed upon scheme, the US will reduce tariffs on Indian products from 50 per cent to 18 per cent, while India has agreed to eliminate or cut duties on a large number of American industrial products, farm produce, and food items. Furthermore, India also announced that it intends to buy USD 500 billion worth of energy products, aircraft, and technology from the US over the coming five years. Trading activities were further guided by active management from the Reserve Bank of India, buying dollars near 90.05 levels to prevent undue appreciation subsequent to the announcement of the trade deal.
On the domestic front, the Sensex surged 415.97 points to 83,996.37, and the Nifty climbed 126.05 points to 25,819.75. This positive market trend was supported by foreign institutional investors who purchased equities worth Rs 1,950.77 crore on Friday. Meanwhile, India’s forex reserves reached a new all-time high of USD 723.774 billion for the week ending January 30, following a jump of over USD 14 billion.
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