The rupee appreciated sharply by 119 paise to 90.30 against the US dollar in early trade on Tuesday, buoyed by a reduction in American tariffs on Indian goods to 18% from earlier levels. 

At the interbank foreign exchange market, the domestic currency opened at 90.30, registering a strong gain from its previous close of 91.49. Forex traders said the tariff cut has altered market sentiment, improving India’s relative trade position and reopening the door for foreign institutional investor (FII) participation.  

India-US trade deal

Late on Monday night, Prime Minister Narendra Modi and US President Donald Trump officially confirmed the much-anticipated India-US trade deal, which immediately lowered US tariffs on Indian goods 18%. Both leaders described the agreement as a turning point in economic ties between the world’s two largest democracies. 

President Trump first announced the deal on his social media platform Truth Social. The development was later confirmed by Prime Minister Modi following a high-level call with the US President. “Wonderful to speak with my dear friend President Trump today. Delighted that Made in India products will now have a reduced tariff of 18%. Big thanks to President Trump on behalf of the 1.4 billion people of India for this wonderful announcement,” Modi said. 

Impact of the tariff reduction

Commenting on the impact of the tariff reduction, Rajeev Juneja, President of PHDCCI, said the move signals a renewed US commitment to trade openness and economic efficiency. “Reduced tariffs lower input costs, strengthen supply chains and help ease inflation by cutting prices for businesses and consumers. Key sectors such as manufacturing, technology, healthcare and renewable energy stand to benefit through better access to intermediate goods and capital equipment,” he said, adding that the decision reflects growing trust and predictability in bilateral trade. 

Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six currencies, was down 0.20% at 97.43. Brent crude, the global oil benchmark, slipped 0.41% to $66.03 per barrel in futures trade. 

On the domestic equity front, markets rallied sharply, with the BSE Sensex surging 2,138.08 points, or 2.62%, to 83,804.54 while the NSE Nifty climbed 607 points, or 2.42%, to 25,695.40. Foreign Institutional Investors, however, remained net sellers, offloading equities worth Rs 1,832.46 crore on Monday, according to exchange data.