The Rupee rallied at open on Tuesday, supported by expectations that the U.S.–India trade deal will draw foreign investors back to Indian assets and alleviate hedging activity-related pressure. The deal, announced by U.S. President Donald Trump on social media following a call with Prime Minister Narendra Modi, effectively dismantles a punitive tariff regime that had seen duties on Indian goods exports climb to 50%, the highest in Asia. By removing penalties linked to India's purchase of Russian energy and slashing reciprocal tariffs to 18%, the agreement is expected to encourage a return of foreign capital after record equity outflows in 2025 left the rupee under sustained pressure. The rupee was the worst-performing Asian currency in 2025, down nearly 5% for the year and more than 2% last month. The trade deal is expected to break a self-reinforcing cycle of hedging that has weighed on the rupee. Importers, bracing for prolonged currency weakness, had stepped up dollar purchases in the forward market, while exporters were reluctant to hedge, creating a demand-supply mismatch. A senior treasury official at a private-sector bank said the removal of the tariff overhang could shift what had become a "psychological issue" for the currency. With rupee depreciation expectations likely to cool, the imbalance between importer and exporter hedging is expected to narrow, helping set in motion a more virtuous cycle that will help rupee. The dollar held gains on Tuesday as positive economic readings and shifting expectations for Federal Reserve policy outweighed concerns about another U.S. government shutdown. The Aussie rose after the Reserve Bank of Australia delivered on an expected rate hike, the first of three major central bank decisions this week. The yen remained lower days before a pivotal election in Japan, and as the finance minister played down comments from the nation's premier on the benefits of a weak currency. The dollar index , which measures the greenback against a basket of currencies, was little changed at 97.51, after a two-day advance. The euro was up 0.1% at $1.1802, and the yen tacked on 0.1% to 155.47 per dollar. The dollar has been on an upswing since U.S. President Donald Trump nominated Warsh as the next Fed chair on expectations he will be less likely to press for rapid rate cuts than some other candidates. On Monday, Trump announced a trade deal with India that slashes tariffs on Indian goods in exchange for India halting Russian oil purchases and lowering trade barriers. On the geopolitical front, Iran and the U.S. are due to resume nuclear talks on Friday in Turkey, with Trump warning that bad things would probably happen if a deal could not be reached. The RBA increased its key interest rate on Tuesday, restarting its hiking cycle after three cuts last year. Both the European Central Bank and the Bank of England are expected to keep policy rates on hold when they announce their latest decisions on Thursday. The Australian dollar rose 0.7% to $0.6992. New Zealand's kiwi strengthened 0.3% to $0.6017, while sterling rose 0.1% to $1.3678. Oil prices fell on Tuesday, easing for a second day, as market participants weighed the possibility of a de-escalation in U.S.-Iran tensions, while a firmer dollar placed greater downside pressure on prices. Brent crude futures fell 39 cents, or 0.5%, at $65.91 per barrel at 0330 GMT. U.S. West Texas Intermediate crude was at $61.83 per barrel, down 31 cents, or 0.5%.......