Relief for rupee on risk rally after Trump walks back Europe tariff threat
The Indian rupee gained relief and rebounded from recent lows due to a global risk rally triggered by U.S. President Donald Trump’s decision to retract tariff threats against Europe over Greenland issues. This development, announced at the World Economic Forum in Davos, eased trade tension fears and boosted market sentiment.
Trump stepped back from imposing tariffs on European nations, citing a new framework on Greenland and downplaying forceful measures. The announcement on January 21, 2026, spurred surges in U.S. equities and Asian markets, indirectly supporting emerging market currencies like the rupee.
The rupee hit an all-time low of 91.7425 against the dollar on January 21 but recovered 15 paise to around 91.50 early on January 22, per forward contracts indicating an open near 90.91. Sporadic Reserve Bank of India interventions occurred amid heavy dollar demand, though market recovery signals reduced pressure.
Analysts note ongoing volatility from geopolitical risks, despite the diplomatic tone easing immediate tail risks. Improved risk appetite could sustain rupee gains if dollar demand eases, but trade uncertainties linger.
