The Indian rupee is expected to trade between 85.25 and 86.25 against the US dollar in the near term, according to a report by Bank of Baroda. The report notes that the rupee has depreciated by 0.6% in June 2025 so far, adding to a 1.3% decline in May 2025. The depreciation was largely driven by rising geopolitical tensions, particularly the conflict between Israel and Iran, which led to a sharp 0.6% fall in the rupee on June 13.
However, the report also notes that global currencies have gained in June 2025, mainly due to a weakening US dollar. The dollar index (DXY) dropped by 1.3%, driven by US economic data that showed price pressures in the economy remained under control. This has led investors to expect the US Federal Reserve to cut interest rates later this year, with the chances of a rate cut in September 2025 increasing to around 60%.
Despite the global uncertainty, the Indian rupee has remained relatively stable, in line with the trend seen in other global currencies. The report attributes this stability to the Reserve Bank of India’s strong foreign exchange reserves, which will help keep the rupee’s movement smooth and under control.
Looking ahead, the rupee may face some volatility due to global headwinds and the approaching end of the US tariff pause. However, the report expects the rupee to remain within the predicted range of 85.25-86.25 against the US dollar. The Bank of Baroda report warns that there are risks to the rupee’s stability, including a significant escalation in geopolitical tensions and possible changes in US tariffs. Nevertheless, the report suggests that the Indian rupee is likely to remain relatively stable in the near term, supported by the Reserve Bank of India’s strong foreign exchange reserves.