The Relief for Rupee After India Excluded from US Tariff Hike speaks volumes about how global trade decisions can instantaneously impact a currency. On July 8, 2025, US President Trump announced planned import tariffs affecting 14 nations—but strategically excluded India, sending the Indian rupee soaring. This move offered a major relief for rupee after India excluded from US tariff hike, calming markets and raising optimism about a potential India–US interim trade deal.
This detailed blog explores the relief for rupee after India excluded from US tariff hike, its ripple effects on markets, bond flows, and forex trading, along with 50+ exam-focused MCQs. Ideal for aspirants preparing for UPSC, SSC, Bank, Railways, and State PSCs.
📈 What Triggered the Relief?
US Tariffs Announced: Trump proposed higher import tariffs on July 8, pushing back their implementation from July 9 to August 1
India Excluded: Crucially, India was left out of the tariff list—prompting relief for rupee after India excluded from US tariff hike .
Trade Deal Talk: Trump’s comments on nearing a trade agreement further supported sentiment relief for rupee after India excluded from US tariff hike
Asian Market Calm: While peers like the yen and won remained stable, the rupee gained ground
Forex Flows: Net inflows ~US$81 million in equities and ~$19.6 million in bonds on July 4 relief for rupee after India excluded from US tariff hike
📊 Market & Economic Impact
📉 Currency Movement
Onshore forward showing INR 85.70–85.75 vs. previous ~85.85—clear relief for rupee after India excluded from US tariff hike
Spot rupee gained ~0.16% to 85.71 on July 8
🏦 Equity & Bond Markets
FIIs invested US$81m in equities, ~$19.6m in bonds—the highest since trade discussions heated up
⚖️ Crude & Dollar Index
Brent crude fell 0.6% to ~$69.2/bbl, helping stabilize the rupee
US dollar index declined, aiding the INR
⚠️ Lingering Concerns
Uncertainty remains—deal talks could stall again, triggering volatility. The previous rupee crash of 0.5% was due to 10% tariff fears
1. What major policy decision did the US announce on July 8, 2025?
A) A military agreement with India
B) Higher import tariffs on select countries
C) Complete free trade with Asia
D) Withdrawal from WTO
✅ Answer: B
Explanation: The US announced higher tariffs targeting 14 countries, excluding India.
2. What was the key outcome for India in the tariff decision?
A) India faced sanctions
B) India was included in the tariff list
C) India was excluded from the tariff hike
D) India imposed counter-tariffs
✅ Answer: C
Explanation: India was strategically left out, which brought relief to the Indian rupee and economy.
3. Which Indian currency indicator improved due to the exclusion?
A) Repo Rate
B) Inflation
C) Rupee’s exchange rate
D) Fiscal deficit
✅ Answer: C
Explanation: The rupee gained strength as exclusion from tariffs meant reduced pressure on trade.
4. Why did the Indian stock market rally after the announcement?
A) FDI was banned
B) FII inflows increased
C) Rupee weakened
D) US imposed tariffs on India
✅ Answer: B
Explanation: Foreign Institutional Investors (FIIs) invested heavily due to lower trade risk.
5. Which sector in India benefited immediately after the US tariff announcement?
A) IT Services
B) Textiles
C) Mining
D) Real Estate
✅ Answer: B
Explanation: Textile stocks surged as India’s exports faced no extra US duty, unlike Bangladesh.
6. Which of the following commodities declined after the news?
A) Gold
B) Brent Crude
C) Wheat
D) Cotton
✅ Answer: B
Explanation: Brent crude prices fell 0.6%, reducing India’s import bill and strengthening the rupee.
7. What is the main driver behind currency value fluctuations in such global announcements?
A) Local monsoon
B) RBI repo rate
C) Global investor sentiment
D) Gold price in India
✅ Answer: C
Explanation: Global confidence in a country’s economy affects currency demand and stability.
8. Which financial indicator dropped after India’s exclusion from the US tariff hike?
A) Dollar index
B) SENSEX
C) Repo rate
D) Inflation
✅ Answer: A
Explanation: The dollar index fell, which further boosted emerging market currencies like the rupee.
9. India’s foreign exchange reserves are managed by
A) SEBI
B) Ministry of Commerce
C) RBI
D) IMF
✅ Answer: C
Explanation: The Reserve Bank of India manages forex reserves and intervenes in currency markets.
10. Which country faced a 35% US tariff that helped Indian textile stocks?
A) Vietnam
B) Bangladesh
C) China
D) Sri Lanka
✅ Answer: B
Explanation: US tariffs on Bangladesh’s textiles created an opportunity for Indian exports.
11. What is the currency code of the Indian rupee?
A) INR
B) RUP
C) IND
D) IRU
✅ Answer: A
Explanation: INR is the international currency code used for Indian rupee.
12. What is a ‘forward contract’ in forex?
A) A loan to exporters
B) A legal agreement to exchange currency at a future date
C) An equity bond
D) A type of mutual fund
✅ Answer: B
Explanation: A forward contract locks in exchange rates for a future date, used to hedge risk.
13. On July 8, the one-month USD/INR forward opened at
A) 84.50
B) 86.10
C) 85.70–85.75
D) 85.10–85.15
✅ Answer: C
Explanation: This indicated market stability and reduced fear after India’s exclusion.
14. Which authority regulates forex in India?
A) SEBI
B) RBI
C) NITI Aayog
D) Ministry of Finance
✅ Answer: B
Explanation: RBI regulates forex reserves, inflows, outflows, and exchange rate mechanisms.
15. What is NDF in forex markets?
A) Non-Deliverable Forward
B) Net Domestic Fund
C) National Digital Forex
D) None of the above
✅ Answer: A
Explanation: NDF is a derivative instrument to trade currency outside local jurisdictions.
16. Which of the following is NOT impacted directly by rupee strength?
A) Import costs
B) Export competitiveness
C) RBI dividend
D) Foreign travel expenses
✅ Answer: C
Explanation: RBI dividend is based on profits, not directly linked to rupee movement.
17. Which key global indicator affects emerging market currencies?
A) Crude oil price
B) US dollar index
C) US bond yields
D) All of the above
✅ Answer: D
Explanation: All three impact forex inflows/outflows and affect currency valuation.
18. Rupee strength helps reduce
A) Export earnings
B) Import costs
C) Tourism revenue
D) Inflation globally
✅ Answer: B
Explanation: A stronger rupee makes dollar-denominated imports cheaper for India.
19. What does a high trade deficit mean?
A) Exports > Imports
B) Imports > Exports
C) Balanced trade
D) None of the above
✅ Answer: B
Explanation: India typically has a trade deficit, which pressures the rupee during crises.
20. India’s biggest trading partner (2025) in goods is likely to be
A) China
B) UAE
C) USA
D) Russia
✅ Answer: C
Explanation: USA has emerged as India’s largest trade partner in recent years.
31. Which US President announced the new tariffs in July 2025?
A) Joe Biden
B) Donald Trump
C) Kamala Harris
D) Ron DeSantis
✅ Answer: B
Explanation: Former President Donald Trump, running again, announced a new wave of import tariffs.
32. How many countries were affected by the new US tariffs?
A) 10
B) 12
C) 14
D) 20
✅ Answer: C
Explanation: 14 countries were targeted, but India was notably excluded.
33. India’s textile exports surged due to US tariffs on which country?
A) Bangladesh
B) Sri Lanka
C) China
D) Pakistan
✅ Answer: A
Explanation: US tariffs on Bangladeshi textiles made Indian exports more competitive.
34. Exclusion from tariffs shows India’s
A) Weak trade policy
B) Poor diplomacy
C) Strategic economic importance to the US
D) Need for aid
✅ Answer: C
Explanation: India was excluded likely due to strategic and economic ties with the US.
35. Which international currency is most used in global trade?
A) Euro
B) Yuan
C) US Dollar
D) Pound
✅ Answer: C
Explanation: The US dollar dominates global trade settlements and reserves.
36. The Dollar Index fell after India’s exclusion. What does this indicate?
A) Strengthening of USD
B) Weakening of USD globally
C) Trade war escalation
D) Tariff repeal
✅ Answer: B
Explanation: A weaker dollar often strengthens emerging market currencies like the rupee.
37. Which financial institution monitors India’s current account and trade balance?
A) SEBI
B) RBI
C) Ministry of External Affairs
D) NITI Aayog
✅ Answer: B
Explanation: The RBI tracks balance of payments and current account trends.
38. Which ministry handles India’s foreign trade negotiations?
A) Ministry of Finance
B) Ministry of External Affairs
C) Ministry of Commerce & Industry
D) Ministry of Corporate Affairs
✅ Answer: C
Explanation: The Ministry of Commerce manages international trade agreements.
39. Which Indian financial market would react first to FII activity?
A) Real estate
B) Banking
C) Stock markets
D) Currency printing
✅ Answer: C
Explanation: Stock markets react immediately to Foreign Institutional Investor flows.
40. One impact of US tariffs globally is:
A) Currency stability
B) Cheaper imports
C) Trade uncertainty and volatility
D) Strengthened trade alliances
✅ Answer: C
Explanation: Tariffs often disrupt supply chains and increase global economic uncertainty.
41. Why does the rupee appreciate when FII inflows increase?
A) More foreign demand for rupees
B) RBI sells gold
C) India prints less currency
D) Inflation goes down
✅ Answer: A
Explanation: More demand for INR from foreign investors leads to currency appreciation.
42. Rupee appreciation is good for
A) Exporters
B) Importers
C) Farmers
D) Gold traders
✅ Answer: B
Explanation: Importers benefit as they pay fewer rupees per dollar of goods.
43. What is the impact of a strong rupee on exports?
A) Makes exports cheaper
B) Boosts exports
C) Reduces export competitiveness
D) No effect
✅ Answer: C
Explanation: A stronger rupee makes Indian goods more expensive for foreign buyers.
44. What is a trade surplus?
A) When imports exceed exports
B) When exports exceed imports
C) When foreign aid increases
D) When budget is balanced
✅ Answer: B
Explanation: A trade surplus occurs when a country exports more than it imports.
45. Which is NOT a major factor influencing currency strength?
A) Inflation rate
B) Political stability
C) Oil imports
D) Monsoon forecast
✅ Answer: D
Explanation: Monsoon impacts agriculture, not directly currency strength.
46. Which of the following helps control excessive rupee volatility?
A) NITI Aayog interventions
B) RBI interventions in forex market
C) SEBI policies
D) IMF loans
✅ Answer: B
Explanation: RBI buys or sells USD to stabilize sharp rupee movements.
47. Which of these would most likely weaken the rupee?
A) Strong export data
B) Rising FDI
C) High oil prices
D) US dollar weakening
✅ Answer: C
Explanation: India imports oil. Higher prices raise dollar demand, pressuring INR.
48. What is the function of Free Trade Agreements (FTAs)?
A) To restrict trade
B) To increase tariffs
C) To promote trade by reducing barriers
D) To reduce domestic production
✅ Answer: C
Explanation: FTAs eliminate/reduce tariffs between partner countries to boost trade.
49. What happens if India had been included in the tariff list?
A) Rupee would strengthen
B) Exporters would gain
C) Rupee would weaken
D) No impact
✅ Answer: C
Explanation: Tariffs hurt exports, reduce dollar inflow, and weaken rupee.
50. The term “Relief for Rupee” indicates
A) Rupee depreciation
B) Government bailout
C) Reduction of downward pressure on INR
D) Withdrawal of old notes
✅ Answer: C
Explanation: It means the rupee was saved from further depreciation due to positive news.
51. A weaker dollar globally usually benefits
A) US exporters only
B) Emerging market currencies like the rupee
C) Only European Union
D) None
✅ Answer: B
Explanation: When the dollar weakens, capital often shifts to stronger emerging economies.
52. Which of the following countries is NOT a major textile competitor of India?
A) Bangladesh
B) Vietnam
C) Germany
D) Pakistan
✅ Answer: C
Explanation: Germany is more industrialized and not a key low-cost textile producer.
✅ Final Thoughts
The recent decision by the United States to exclude India from a sweeping tariff hike has brought much-needed relief for the rupee and re-energized investor confidence in India’s economic stability. While 14 countries faced stiff tariff revisions, India’s strategic exemption signals strong diplomatic and trade relations between the two nations.
For aspirants preparing for competitive exams like UPSC, SSC, Bank PO, and state-level tests, this development offers a real-world case study on how global trade policy directly affects domestic currency, stock markets, and foreign capital flows.
Understanding events like this helps you:
Strengthen your grasp on international economics
Predict macroeconomic trends
Master high-weightage GK & current affairs questions
As India continues to play a central role in global supply chains, such decisions will only grow in frequency and importance. Keeping an eye on developments like “Relief for Rupee After India Excluded from US Tariff Hike” ensures you stay informed, exam-ready, and globally aware.
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