Rupee Gains 40 Paise, Closes at 86.99 Against US Dollar

Quick Summary

• The Indian rupee appreciated by 40 paise to close at ₹86.99 against the US dollar on Tuesday, supported by optimism over GST restructuring and positive domestic equity markets.
• the rupee traded with a range between ₹86.92 and ₹87.31 during the day, registering an intraday gain compared to Monday’s close of ₹87.39 per dollar (previous thankfulness was 20 paise).
• Forex experts attributed gains to reduced concerns over US trade tariffs, positivity from GST reforms announced during PM Modi’s Independence Day speech, lower crude oil prices, and a weaker US dollar index (down 0.13%).
• Proposed GST changes include merging tax slabs into two: 5% and 18%. Essential items will remain tax-free while demerit goods may see a top rate of up to 40%. This replaces existing four tiers (nil/zero, 5%, 12%, 18%, and luxury goods taxed at 28%). The changes await approval from the GST Council.
• Equity markets rallied as Sensex rose by +370 points closing at ₹81,644; Nifty also jumped +103 points finishing at ₹24,980 based on strong buying sentiment (+₹550 crore inflow recorded for Monday alone by FIIs).

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Indian Opinion Analysis
The recent appreciation of the rupee reflects improving investor sentiment fueled by proposed structural reforms in India’s Goods and Services Tax (GST). Simplifying multi-tiered tax rates into fewer slabs could enhance clarity while reducing compliance challenges for businesses-a potential long-term benefit if implemented effectively after Council approval.

Furthermore, easing tensions around US trade tariffs has bolstered global market confidence alongside domestic factors like declining oil prices and foreign investment inflows boosting equity indices significantly.

However-and critically-demand pressures via import reliance may cap these currency gains moving forward unless insulating strategies target core vulnerabilities tied directly Import dependency weak links />);