Rupee jumps 119 paise to 90.30 against the US dollar on India-US trade deal

The rupee rose sharply by 119 paise to 90.30 against the US dollar in early trade after the US cut tariffs on Indian goods to 18 per cent. Forex traders said the move could improve FII interest in Indian markets.

Mumbai: The rupee appreciated 119 paise to 90.30 against the US dollar in early trade on Tuesday after US tariffs on India were cut from 50 per cent to 18 per cent.

Forex traders said the 18 per cent tariff changes the outlook, improving India’s relative position and reopening the door for FII participation.

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At the interbank foreign exchange market, the rupee opened at 90.30 against the US dollar, registering a gain of 119 paise over its previous close of 91.49.

“The good news overnight was the US-India trade deal, which was announced after a delay of almost nine months by President Donald Trump and endorsed by PM Narendra Modi, in which the trade tariffs were reduced to 18 per cent, a tad lower than that for Bangladesh and Pakistan, our neighbours, giving Indian exporters a relative advantage,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP.

Bhansali further noted that FIIs may finally buy Indian equities after being sellers for a long time.

“We need to wait and see the RBI stance today and in the coming days, as it needs to buy the short dollar position,” he added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.20 per cent lower at 97.43.

Brent crude, the global oil benchmark, was trading lower by 0.41 per cent at USD 66.03 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex was trading 2,138.08 points, or 2.62 per cent higher, at 83,804.54, while the Nifty was up 607 points, or 2.42 per cent, at 25,695.40.

Foreign Institutional Investors offloaded equities worth Rs 1,832.46 crore on Monday, according to exchange data.