Indian Rupee likely to trade between 85.25-86.25/USD in near term: Bank of Baroda Report

ANI June 18, 2025 263 views

The Indian rupee is expected to trade between 85.25 and 86.25 against the US dollar, according to Bank of Baroda. Geopolitical tensions, including the Israel-Iran conflict, triggered a sharp 0.6% drop in June. A weaker US dollar and potential Fed rate cuts may provide some relief. The RBI’s strong forex reserves are likely to stabilize the rupee amid global uncertainty.

"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" – Bank of Baroda Report
New Delhi, June 18: [India]: 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.

Key Points

1

INR depreciated 0.6% in June 2025 due to Israel-Iran conflict

2

US dollar weakened as Fed rate cut bets rise to 60%

3

RBI forex reserves to cushion rupee volatility

4

Geopolitical tensions and US tariffs pose risks

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 per cent in June 2025 so far, adding to a 1.3 per cent 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 per cent 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.

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 per cent.

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 per cent, up from about 50 per cent 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.

Reader Comments

R
Rahul K.
The rupee's stability is crucial for our economy. While 86.25/USD seems manageable, we must be cautious about geopolitical risks. RBI's strong forex reserves are reassuring, but we need long-term solutions to reduce dollar dependency. Make in India should focus more on export-oriented manufacturing!
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Priya M.
As someone who sends money to family abroad, these fluctuations really hit hard 😔 Last month's transfer got me less rupees than usual. Hope RBI can maintain stability despite global uncertainties. The US Fed rate cut might bring some relief!
A
Amit S.
Why is our rupee always at the mercy of global events? Israel-Iran conflict affects our currency thousands of miles away! We need stronger economic fundamentals. On positive side, our forex reserves crossing $600 billion is a big achievement 🇮🇳
S
Sunita R.
The report is quite balanced. While rupee has depreciated, it's performing better than many emerging market currencies. The real concern is how US tariff changes might impact our exports. Our IT sector might benefit if dollar weakens further though!
V
Vikram J.
Common man doesn't understand these forex fluctuations until petrol prices increase! Government should explain these economic concepts better to public. The 0.6% drop may seem small but has cascading effects on imports and inflation. Jai Hind!
N
Neha P.
As a small business owner importing raw materials, this rupee volatility is worrying. Can't we have more predictable currency policies? The report mentions RBI's role - hope they intervene at right time to prevent sudden spikes. #SupportLocalBusiness

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Indian rupee USD exchange rate Bank of Baroda RBI forex reserves US Fed rate cuts currency volatility