It’s Wednesday morning, February 4, 2026, and the “victory lap” for the Rupee just hit a speed bump. After yesterday’s historic 1.3% surge—the best day since 2018—the currency opened 16 paise lower at 90.43 against the dollar.
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The thing is, as soon as the Rupee dipped below the psychological 90 mark, corporate importers and hedgers pounced on the “cheap” dollars. It’s a classic case of the market catching its breath after the Trump-Modi high. Or nothing.
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The Currency Reset: Field Notes
It’s an ongoing situation where the euphoria of the 18% reciprocal tariff deal is meeting the cold reality of importer demand. Here’s the ground reality:
The Snap-Back: Yesterday, the Rupee was the king of Asia, settling at 90.27. This morning? It opened at 90.35 and quickly slid to 90.43. Why? Importers have been waiting for months for a sub-90 level to lock in their costs. And then the rush for the exit followed.
The “Malhotra” Factor: Everyone is now looking at RBI Governor Sanjay Malhotra. The Monetary Policy Committee (MPC) kicked off its three-day huddle today. With the repo rate at 5.25%, the consensus is a “Pause.” Let’s be real—with a trade deal in the bag, the RBI doesn’t need to “waste a bullet” on a rate cut right now.
Liquidity Games: The RBI has been selling dollars to keep the Rupee from crashing in late 2025, which sucked the life out of the banking system. Now, analysts expect a ₹1 trillion bond-buying spree (OMO) to pump cash back in. Those too.
The “Reciprocal” Reality: While the headline says 18% tariffs, there’s no official signed text yet. Forex traders are cautious; they want to see the fine print on the “Russian Oil exit” before betting the house on a 89-handle. And here’s the kicker—Goldman Sachs is already whispering about a USD/INR target of 94 if the trade flows don’t materialize fast enough. Or nothing.
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Rupee Outlook & RBI MPC Tracker (Feb 2026)
| Indicator | Current Status | Market Sentiment |
| Rupee (USD/INR) | 90.43 | 📉 Pullback after 122-paise rally. |
| Repo Rate | 5.25% | ⏸️ Expected Status Quo (Feb 6). |
| Trade Deal Impact | 18% Tariff | 🚀 Long-term bullish for FII inflows. |
| Liquidity | Deficit | 💉 RBI OMOs expected to pump ₹2 Lakh Cr. |
And Here’s the Kicker…
Exporters who were crying last week are now being told by advisors to hedge 40% of their positions at these levels. The thing is, the “sweet spot” for the Rupee is currently seen between 89 and 92.
One side comment—the Sensex is holding onto its 2,000-point gain from yesterday, which is keeping the Rupee from a total freefall. It’s a bit messy, but for the first time in a year, the “India Story” actually has some legs in Washington. It’s an ongoing situation. Or nothing.
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End….
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