Rupee Shakes Off Volatility, Markets Rally on Trade Clarity

With the US trade deal finally clinched, the rupee staged a sharp rebound against the dollar on July 29, closing at 85.72 per USD after recent lows. The relief rally in currency markets was mirrored on Indian bourses, where both the Sensex and Nifty hit fresh intraday highs, buoyed by improved foreign investor sentiment and the resolution of tariff uncertainty. The gains were led by export-facing sectors, with IT services and pharmaceuticals logging outsized advances on expectations of surging overseas orders.

Market strategists caution, however, that further upside will depend on the government’s ability to implement the new trade regime smoothly and maintain macroeconomic stability amid persistent global headwinds. Bond yields held steady as the Reserve Bank signaled its readiness to use forex reserves if fresh volatility reemerges, assuring markets that India’s fundamental strengths remain intact.

For corporate treasuries and investors alike, the day’s turnaround offers a respite from the anxiety of the past quarter and highlights the centrality of external trade relationships in shaping India’s financial landscape. Attention now turns to the domestic regulatory pipeline, where fresh reforms are imminent to accelerate export financing and reduce procedural bottlenecks for industry.