Rupee climbs 130 paise against US dollar to 90.20:Biggest gain in 3 years after Trump’s update on India-US trade deal

On Tuesday, February 3, the Indian rupee strengthened sharply against the US dollar, reaching around ₹90.20, its largest single-day gain in three years. This rally followed the announcement of a new trade agreement between India and the United States, under which US President Donald Trump agreed to cut tariffs on Indian goods from as high as 50 % down to 18 %. Earlier in 2025, the rupee had weakened by roughly 5%, making it one of Asia’s worst-performing currencies. In January 2026 alone, it declined by more than 2 %. Persistent selling by Foreign Portfolio Investors (FPIs) had kept pressure on the currency. But on Tuesday, the rupee rebounded strongly, gaining about 130 paise compared with the previous close near ₹91.49. Why the rupee surged after the deal The strength in the rupee is largely linked to the trade pact between India and the US, which has eased long-standing tariff uncertainty. President Trump announced the deal on social media, saying the US would reduce its tariffs on Indian exports and India would increase its purchases of US goods — including energy, technology and agricultural products — worth potentially hundreds of billions of dollars over the coming years. This agreement has lent fresh confidence to investors and markets, helping reverse some of the rupee’s earlier weakness and boosting sentiment across financial markets. Rupee may strengthen to 89 levels Market experts believe the rupee’s upward momentum could continue in the near term. According to market analyst Anuj Gupta, rising exports are expected to boost demand for the rupee, which could push the currency into the 89.50–89.00 range in the short term. Meanwhile, Anindya Banerjee, Head of Currency Research at Kotak Securities, said that recent tariff reductions have created favorable conditions for further appreciation of the rupee. However, he added that the extent of the gains will also depend on the level at which the Reserve Bank of India (RBI) intervenes in the currency market. How Is a Currency’s Value Determined? When a currency loses value against the US dollar, it is referred to as currency depreciation or weakening. A country’s foreign exchange reserves play a key role in determining its currency’s strength. These reserves are used for international trade and payments, and any increase or decrease directly affects currency value. If India’s dollar reserves are strong and balanced against foreign holdings of rupees, the currency remains stable. A decline in dollar reserves leads to rupee weakness, while an increase helps the rupee strengthen.