The Indian rupee is expected to trade in the range of 85.25 to 86.25 against the US dollar in the near term, according to a report by Bank of Baroda. The report also warned that there are risks to the rupee’s stability due to rising geopolitical tensions and possible changes in US tariffs.
It stated, “We expect INR to trade in the range of 85.25-86.25/USD in the near-term. Risks remain from a significant escalation in geo-political tensions.”
The report highlighted that the rupee has depreciated by 0.6% in June 2025 so far, adding to a 1.3% decline in May 2025. Much of the pressure on the rupee came in the second week of June, especially after reports of a conflict between Israel and Iran.
Before this, the rupee was trading in a narrow range between 85.39 and 85.63 from June 2 to June 12. However, after news of Israel’s attack on Iran came out, the rupee fell sharply by 0.6% on June 13. This was the biggest one-day fall for the rupee in a month. Since then, the rupee has stabilised, but is still trading above the 86 per dollar mark.
What Else For Indian Rupee?
The report also noted that global currencies gained in June 2025, mainly because the US dollar weakened. The dollar index (DXY) dropped by 1.3%. This happened as US economic data, such as inflation and labour market reports, showed that price pressures in the economy remain under control. The labour market data, however, showed mixed trends.
Due to these factors, investors are expecting the US Federal Reserve to cut interest rates later this year. The chances of a rate cut in September 2025 have increased to around 60%, up from about 50% a month ago.
Despite the global uncertainty, the Indian rupee has remained mostly stable. This is in line with the trend seen in other global currencies, which also saw a brief fall but later recovered. Going forward, the rupee may face some volatility due to global headwinds and the approaching end of the US tariff pause.
However, the Reserve Bank of India’s strong foreign exchange reserves will help in keeping the rupee’s movement smooth and under control, the report said.
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