Indian Rupee Declines Against US Dollar Following Trade Framework Announcement
The Indian rupee opened weaker on Tuesday, falling 11 paise to trade at 90.77 against the US dollar during early morning sessions. The currency remained in negative territory as traders exercised caution in response to the newly announced interim trade framework between New Delhi and Washington.
Forex Market Movements and Trading Patterns
At the interbank foreign exchange market, the rupee initially stood at 90.63 levels against the greenback. As trading progressed, the domestic currency surrendered ground and slipped to 90.77, marking an 11-paise decline compared to the previous closing rate. This downward movement followed a volatile Monday session where the rupee oscillated between positive and negative zones before settling almost flat, ending just 1 paisa lower at 90.66.
Market Reaction to US-India Trade Agreement
Currency dealers noted that the bilateral pact initially appeared supportive as it prevented immediate disruptions, outlined the next phase of negotiations, and provided exporters with assurance against sudden shocks. However, a more detailed examination prompted market participants to reassess their initial optimism.
"The agreement subjects India to ongoing US oversight, particularly concerning energy imports from Russia—a sensitive issue that leaves room for penalties to be reinstated at any moment," stated Amit Pabari, Managing Director of CR Forex Advisors.
Technical Analysis and Support Levels
Pabari indicated that near-term price action would depend on whether key support levels remain intact. He identified the 90.00–90.20 region as a crucial cushion and suggested that if this zone holds, the currency pair could gradually move toward 91.00–91.20 over the coming sessions.
The analyst also emphasized the Reserve Bank of India's potential role in market stabilization. "During rupee depreciation phases, the RBI is anticipated to intervene with dollar purchases, absorbing inflows rather than permitting sharp appreciation," he explained.
Foreign Investment Flows and Market Sentiment
Foreign portfolio flows have shown some improvement, with approximately $2 billion entering Indian markets so far this month, contributing to overall sentiment stability. Despite this positive development, reservations persist within trading circles.
"While these inflows have helped stabilize sentiment, the market remains skeptical about their sustainability. With global policy signals shifting almost daily, currency markets continue to price in caution rather than celebration," Pabari added.
Exchange data revealed that foreign institutional investors were net buyers of shares worth Rs 2,254.64 crore on Monday.
Broader Market Indicators and Equity Performance
In global markets, the dollar index—which measures the US currency against six major counterparts—edged down 0.02% to 97.79. Brent crude futures also softened, declining 0.28% to $68.85 per barrel.
Meanwhile, Indian equity markets began Tuesday's session on a positive note. The benchmark Sensex advanced 149 points to reach 84,214.75, while the Nifty gained 44.45 points to touch 25,911.75 during early trade.
