The rupee is expected to trade in the range of 87.5–88.5 against the US dollar in the near term, while strong macroeconomic fundamentals are likely to support the domestic currency in the long run, according to a report released by Bank of Baroda.
The report stated, “We are anticipating a range of 87.5–88.5/USD in the near-term. Over the longer term, we continue to believe that robust macro-fundamentals should support the domestic currency.”
Tariffs and Outflows Put Near-Term Pressure on Rupee
The Indian currency depreciated to a record low in August 2025 as additional US tariffs came into effect. Month-end demand from importers and sustained foreign portfolio investor (FPI) outflows from domestic equity markets further contributed to the weakness in the rupee.
The currency declined by 0.7 per cent in August. However, when seen in the context of a weaker dollar, the fall in the rupee appeared more pronounced, the report highlighted.
The near-term outlook in the report also shared that some pressure on the rupee may persist as investors await clarity on the impact of tariffs and developments surrounding trade negotiations.
The Reserve Bank of India (RBI) is likely to intervene only to curb sharp volatility in the exchange rate, with a higher tolerance level for a weaker domestic currency.
Rupee Crosses 88 Mark Amid Investor Nervousness
More recently, the rupee crossed the 88-per-dollar mark, touching another record low. According to the report, this largely reflects a deterioration in investor confidence due to tariff-driven uncertainty. The imposition of a 50 per cent tariff rate has had a strong psychological impact on investor sentiment.
The US accounts for nearly 20 per cent of India’s total exports, and a 50 per cent tariff on outbound shipments could potentially weigh on the country’s growth outlook.
The report also noted that this factor is one of the key reasons behind investor nervousness and short-term pressure on the rupee.
At the same time, the report added that while RBI’s intervention in the forex market has been relatively low by historical standards, the central bank is expected to ensure that the depreciation in the domestic currency remains gradual and orderly.
It stated, “While low by historical standards, RBI intervention in the forex market is likely to ensure that the movement in the domestic currency is orderly and gradual.”
Given these developments, the report projects the rupee to remain in the 87.5–88.5 per dollar range this month, before stabilising over the long term on the back of India’s strong economic fundamentals.
(Disclaimer: This story has been syndicated from ANI and has not been edited by our editorial team except for the headline or formatting. ANI is solely responsible for the content.)
Also Read: Stock Market Today: Markets Open Positive but Trade Flat- Got You Confused?
Aishwarya is a journalism graduate with over three years of experience thriving in the buzzing corporate media world. She’s got a knack for decoding business news, tracking the twists and turns of the stock market, covering the masala of the entertainment world, and sometimes her stories come with just the right sprinkle of political commentary. She has worked with several organizations, interned at ZEE and gained professional skills at TV9 and News24, And now is learning and writing at NewsX, she’s no stranger to the newsroom hustle. Her storytelling style is fast-paced, creative, and perfectly tailored to connect with both the platform and its audience. Moto: Approaching every story from the reader’s point of view, backing up her insights with solid facts.
Always bold with her opinions, she also never misses the chance to weave in expert voices, keeping things balanced and insightful. In short, Aishwarya brings a fresh, sharp, and fact-driven voice to every story she touches.
