Indian rupee opens stronger against US dollar

The trading range for the day was expected to be between 84.50 and 85.25, according to analysts. The dollar maintained its gains following a significant trade pact between the US and China.

The US will reduce tariffs on Chinese goods from 145 per cent to 30 per cent for 90 days, while China said it will cut tariffs on US goods from 125 per cent to 10 per cent for 90 days. The two countries will establish a mechanism to continue discussions about economic and trade relations.

According to analysts, any fresh developments on the geopolitical front are likely to have a significant impact on the rupee’s direction.

In FY25, rupee traded in the range of 83.10 and 87.6 against the greenback, initially weakening after the US election results and depreciating by 2.4 per cent over the year due to persistent FPI outflows and a strong US dollar.

Despite these challenges, the rupee remained relatively stable compared to other global currencies, supported by healthy government finances, a declining current account deficit, improved liquidity, and moderating oil prices, among others, according to the NSE’s ‘Market Pulse Report’ for April.

Towards the end of the year, a reversal in dollar strength and renewed FPI inflows into debt helped the rupee recover, appreciating by 2.4 per cent in March 2025.

The rupee’s average annualised volatility declined to 2.7 per cent in FY25, positioning it among the least volatile major emerging market currencies, highlighting India's strong external buffers and proactive forex management.

“However, the rupee remained overvalued, with the 40-currency trade weighted REER rising to 105.3, although both REER and NEER moderated gradually from H1FY25, indicating an easing of overvaluation. The one-year forward premium for the rupee continued to moderate, reflecting changing premium dynamics and India's macroeconomic resilience,” the report mentioned.