Domestic economic conditions are supportive to the rupee and this may lead to the domestic currency trading between ₹85.5 to ₹87.5 a dollar in fiscal 2026, according to a research note by Bank of Baroda.
Improved growth prospects, slowing inflation and stable external deficits will benefit the rupee.
The risks from the U.S. tariff actions, however, is not immediately certain, the report said. The rupee spot price depreciated 2.5%, closing at ₹85.45 a dollar as on March 31, 2025, according to data from Google Finance. The Indian rupee, however, performed better than most currencies as, it was the only currency after British Pound, Brazilian Real and the Euro that had appreciated, in March 2025.
“After some upheaval, markets have largely taken U.S. tariff actions in stride, however, the balance will once again be tested. With the U.S. President’s April 2 deadline looming, markets await more clarity on the extent and scope of U.S. reciprocal tariffs. INR’s fortunes are likely to remain tied to how these global factors play out. On the domestic side, conditions remain favourable for INR, which should lend support to the domestic currency amidst mounting external challenges,” said Aditi Gupta , Economist at Bank of Baroda Research. “There will be sporadic exogenous shocks, which are likely to be managed by the RBI through timely intervention,” Ms. Gupta added.
Published – April 02, 2025 09:57 pm IST
