Home / Business and Economy / US Tariff Cut Sparks Rupee Surge & Nifty Rally
US Tariff Cut Sparks Rupee Surge & Nifty Rally
3 Feb
Summary
- Rupee appreciated 1.4% after US reduced tariffs on Indian goods to 18%.
- Nifty 50 index surged by 639 points, indicating renewed investor confidence.
- Foreign investors are showing renewed interest in Indian equities.
The Indian rupee experienced a substantial rally, appreciating by 1.4% against the US dollar. This significant gain, the largest since December 2018, followed the US government's decision to reduce tariffs on Indian goods to 18%. This development has positively impacted Indian assets, with the benchmark Nifty 50 index closing 639 points higher. The equity market saw a near 3% rise, marking its best performance since May 12, 2025.
The reduction in US tariffs is seen as a key factor in revitalizing foreign investor interest in Indian equities. Foreign portfolio investors had previously withdrawn substantial amounts, partly due to currency depreciation and valuation concerns. A stronger rupee, coupled with corrected valuations, is anticipated to reverse this trend. Analysts predict the rupee may move towards the 88.50-89 range against the US dollar.
While the bond market also reacted positively, yields on the 10-year benchmark bond closed slightly lower. However, concerns persist regarding India's high borrowing program. Market participants believe the currency's appreciation will alleviate foreign investor hesitations, potentially leading to positive capital inflows into the Indian market.
