The rupee ended Tuesday around ₹90.30 to the US dollar, posting its strongest intraday performance in nearly six years as markets reacted to a breakthrough trade agreement between India and the US. The sharp rebound in the currency has shifted sentiment, and analysts see potential for further strengthening in the coming months despite ongoing uncertainties around the pact’s implementation.
The rupee opened 1.23 percent higher at 90.39 against the US dollar and strengthened further during the session to touch 90.13, marking an intraday gain of 1.56 percent. This was the steepest single-day intraday rise since March 26, 2020.
The rally followed confirmation that India and the US had concluded a trade deal after months of negotiations, though detailed terms have yet to be released.
Market participants view the deal as a meaningful macroeconomic positive. Analysts say improved trade conditions could support faster economic growth, stronger corporate earnings and a firmer currency over the medium term. Some estimates suggest India’s growth could rise to around 7.5 percent in FY27 if the agreement leads to sustained trade and investment gains.
Global brokerages see room for further appreciation in the rupee. HSBC expects the currency to strengthen towards 88 per dollar by the end of March, supported by lower US tariffs and improving balance-of-payments dynamics. The brokerage considers the rupee slightly undervalued and believes seasonal inflows during the January–March quarter could aid a partial recovery.
However, analysts caution that the recovery may not be smooth. Challenges could emerge in rapidly shifting away from Russian oil imports, while the Reserve Bank of India’s foreign exchange interventions could add volatility. The central bank has intervened intermittently in recent months to discourage one-sided speculative positions in the currency.
Meanwhile, analysts at Elara Capital expect the rupee to rebound towards the 88.5–89 range in the near term, supported by a reversal in foreign portfolio flows. The rupee’s real effective exchange rate-based valuation is currently at its lowest level since 2014, indicating that the currency remains undervalued despite Tuesday’s sharp rally.