- Indian Rupee (INR) rises from a record low yesterday
- Reciprocal tariffs reduced to 18% from 25%
- The US Dollar (USD) is rising versus major peers
- US ISM manufacturing PMI rises to a 2022 high
The US dollar-to-Indian rupee (USD/INR) exchange rate is falling after gains last week. The pair rose 0.02% in the previous week, settling on Friday at 91.69. At 17:30 UTC on Friday, the pair is falling -1.34% at 90.46.
The Indian rupee has soared higher on news of a trade deal between the US and India. President Trump said he has agreed to a trade deal with India, and India has also agreed to stop buying oil from Russia and instead buy more from the US and possibly Venezuela.
Effective immediately, the trade deal between the US and India will change, with reciprocal tariffs reduced from 25% to 18%.
As part of the deal, India will also buy $500 billion worth of US energy technology and agricultural products
As well as the U.S. trade deal, India is digesting the latest budget, in which the federal government kept a tight leash on spending, given earlier income and consumption tax cuts that weighed on revenue.
The government will target a debt-to-GDP ratio of 55.6% for the common fiscal year, resulting in a fiscal deficit of 4.3% of GDP.
The US Dollar is falling versus the Rupee but rising versus its major peers. The US Dollar Index, which measures the US dollar against a basket of major currencies, is up 0.58% to 97.56, after falling 0.6% last week.
The U.S. dollar has risen against its major peers, extending Friday’s rally, after President Trump announced Kevin Warsh as the next Federal Reserve chair. While Warsh is expected to lower interest rates, he is also expected to reduce the Federal Reserve’s balance sheet.
On the data front, US ISM manufacturing figures showed that activity in the sector rose to its highest level since 2022.
ISM manufacturing rose to 52.6 in January, up from 47.9 in December and well above the 48.5 expected.