Indian Rupee Posts Best Single-Day Gain Since 2018 Amid Lower US Tariffs

After a whirlwind 2025, it seems that 2026 might just be the year of the Indian rupee , as the currency on Tuesday posted its best single-day gain since December 2018. The Indian rupee ended the day at 90.27 against the US dollar, rising 125 paise, or 1.36%, from its previous close of 91.51. Analysts said that US President Donald Trump’s announcement of lower tariffs on Indian imports helped lift market sentiment and provided immediate relief to the currency. On January 2, 2026, Trump said in a social media post that tariffs on Indian goods would be lowered to 18% from the current 50%. This boosted market sentiment, which was evident as the rupee opened at the 90.40 level against the greenback. “Even as operational details are still being finalised, markets moved quickly. USD/INR fell sharply towards 90.30, a move of over one rupee, reflecting not just short-term relief but a reassessment of India’s medium-term trade outlook, capital flows, and geopolitical risk premium,” said Amit Pabari, Managing Director at CR Forex Advisors. With reciprocal tariffs on India lowered to 18%, Indian exports stand at an advantage compared with other Asian countries that face relatively higher duties, such as Pakistan (19%), Bangladesh (20%) and China (25–30%). “India now benefits from one of the lowest US tariff rates in Asia, improving export competitiveness and supporting a more stable external balance. For the rupee, this implies a lower risk premium over time,” Pabari added. Analysts said that the current geopolitical environment provides stability for the currency, which is likely to attract foreign investors back to Indian equity markets. According to provisional data available on the NSE for February 3, foreign investors were net purchasers of domestic equities worth Rs 26,883 crore. Pabari added that relatively attractive equity valuations, resilient macro fundamentals, and a clear positive signal from the US on trade policy together improve India’s investment case. “In parallel, expectations of a more stable or firmer rupee enhance the attractiveness of Indian debt, particularly for longer-term bond investors,” he said. Currency experts said that the broader trajectory of the Indian rupee will now be determined by the Reserve Bank of India’s Monetary Policy Committee, which is scheduled to meet on February 6, 2026. Pabari believes the RBI’s base case is to keep the repo rate unchanged. He added that, with strong GDP numbers, there is limited urgency for immediate monetary policy easing. Kotak Securities’ Anindya Banerjee sees immediate near-term support for the rupee at 90 per dollar, followed by 89.30 per dollar. Amit Pabari said, “Over the next few sessions, USD/INR is likely to find support in the 89.50–89.80 zone, while upside moves may face resistance around 90.60.”