The Indian rupee is expected to trade in a narrow range of 85.25 to 86.25 against the US dollar in the near future, according to a recent report by the Bank of Baroda (BoB). Although the rupee has remained relatively stable, the report warns it faces risks from rising geopolitical tensions and possible changes in US trade policy.
“We expect the rupee to trade between 85.25 and 86.25 per dollar in the near term. Risks remain from any major escalation in geopolitical tensions,” the BoB report said.
So far in June 2025, the rupee has weakened by 0.6 percent after falling 1.3 percent in May. The currency saw its biggest single-day drop in a month on June 13, falling 0.6 percent following news of Israeli military action against Iran. Before this, the rupee stayed relatively steady, trading between 85.39 and 85.63 from June 2 to June 12.
Though the rupee has regained some ground since then, it still trades above 86 against the dollar.
Globally, many currencies gained value in June due to a weaker US dollar. The dollar index (DXY) dropped 1.3 percent after US data showed easing inflation and mixed signals from the labor market. This has led markets to expect the US Federal Reserve might cut interest rates later this year. The chance of a rate cut in September has increased to around 60 percent, up from 50 percent last month.
Despite external risks, the rupee has stayed relatively stable, reflecting trends in global currencies. The BoB report also highlighted India’s strong foreign exchange reserves, which provide a solid cushion to handle any market volatility.
While global uncertainties and the possible end of US tariff pauses could affect market sentiment, the rupee is likely to stay within the predicted range if current trends continue.
