India-New Zealand FTA to come into force next month, grants 100% duty-free access to Indian exports
The India-New Zealand free trade agreement will officially commence next month. This pact grants India one hundred percent duty-free access for all its exports. New Zealand previously imposed tariffs up to ten percent on key Indian goods. The agreement also promotes significant investments between the two nations. New Zealand has committed to investing twenty billion US dollars over fifteen years.
The Indian rupee reached a two-month peak on Thursday after receiving an unprecedented $136.4 billion through special foreign-currency mobilisation measures, surpassing market expectations. This surge bolstered the currency's strength amid global uncertainties, including a renewed US-Iran conflict that drove up crude prices and triggered a bond selloff.
The rupee opened at 94.30 per dollar, its highest level since late June, following a settlement of 94.97 the previous day. India's currency has risen over 1% this week, positioning it among Asia's top-performing currencies. The inflows, primarily through non-resident deposits, will bolster India's foreign-exchange reserves, which hit an all-time high last month, providing the central bank with additional resources to defend the rupee and counter oil and external shocks.
Kunal Sodhani, head treasury of Shinhan Bank, emphasized that the larger dollar cushion enhances the Reserve Bank of India's (RBI) ability to resist both excessive depreciation and appreciation. The higher currency reserve leaves the RBI well-positioned to absorb the pressures from rising oil prices, which remain the primary risk for India. Brent crude prices have risen 7% this week, hitting their highest level since late July.
Meanwhile, expectations of a Federal Reserve rate hike this month have led to higher US yields and supported the dollar. The odds of a Fed rate hike at this month's meeting now stand at 2-in-3. The 10-year US Treasury yield is near its highest level in almost three years. The boost in the Reserve Bank of India's foreign exchange reserves, already at a record $729.3 billion, further strengthens its capacity to manage the currency's fluctuations.
Written by urgent.news from Business Recorder's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
