The Indian Rupee opened sharply higher at 90.40 against the US dollar on Tuesday, February 3, 2026. This represents a significant surge of as much as 1.2% compared to Monday's close of 91.52. The Rupee's appreciation is largely attributed to the recently finalized trade deal between the United States and India, which has boosted market sentiment and improved expectations of capital inflows.

The landmark trade agreement, announced by U.S. President Donald Trump following discussions with Indian Prime Minister Narendra Modi, involves a substantial reduction in tariffs on Indian goods entering the United States, decreasing from 50% to 18%. In return, India has agreed to halt purchases of Russian oil and lower trade barriers for U.S. exports.

Analysts at OCBC and Finrex Treasury Advisors had anticipated the currency rising about 1% on Tuesday, while Barclays predicted a “knee-jerk rally” of 1-2% following the trade deal. The 1-month non-deliverable forward indicated the rupee would open in the 90.15-90.25 range versus the U.S. dollar, having settled at 91.5125 on Monday.

The positive momentum extends beyond the currency markets, with Indian equity markets also experiencing a robust opening. The BSE Sensex jumped 2489.12 points (+3.05%) to reach 84,064.91, while the NSE Nifty soared 686.80 points (+2.74%) to 25,795.65. This surge reflects a powerful combination of positive geopolitical news, firm global cues, and sharp gains across Asian markets.

The India-U.S. trade deal is expected to have a far-reaching impact on the Indian economy. It is anticipated to attract foreign investors back to Indian assets and alleviate pressure related to hedging activities. Moreover, the reduction in tariffs is poised to boost Indian exports and enhance the country's trade competitiveness.

Global cues are also providing support to the market rally. Asian markets have rebounded strongly, with Japan's Nikkei jumping 2.5% and South Korea's KOSPI rallying 4%, while S&P 500 futures edged higher amid improving risk appetite after a jump in US factory activity.

The Indian Rupee's strong opening and the overall market rally signify a positive shift in investor sentiment and improved confidence in the Indian economy following the trade agreement with the United States. This development is expected to pave the way for increased economic cooperation and stronger bilateral relations between the two countries.