Rupee likely to appreciate in near term amid stronger flows & global tailwinds: Report
NEW DELHI: The Indian rupee is expected to strengthen against the US dollar in the near term, driven by a combination of improving domestic fundamentals and a supportive global environment, according to a recent report by Bank of Baroda.
The report, as per ANI, projects the rupee to trade in the range of 84 to 85 per US dollar over the coming days.
“We expect INR to trade with an appreciating bias in the near-term in the range of 84-85/US dollar,” the bank noted in its currency outlook. However, it also warned that “escalation in US-China trade relations poses a significant risk to our view.”
The rupee has already gained ground in recent months. It appreciated by 1.1 per cent in April 2025, following a sharper rise of 2.4 per cent in March. A key driver of this upward movement has been the broad weakness in the US dollar, which has come under pressure due to a sluggish economic outlook in the United States.
Additionally, falling global crude oil prices have eased import cost pressures for India, further supporting the domestic currency.
Improving foreign investor sentiment has also played a critical role. After witnessing sustained outflows in the first quarter of 2025, April saw a turnaround with positive equity inflows returning to Indian markets.
This resurgence in foreign investment reflects a broader shift in investor preference towards emerging markets like India.
The report highlighted that US officials have signalled progress in trade talks with key partners, helping cool global tensions and revive market confidence. This softer stance on tariffs has helped improve risk appetite across global financial markets.
Bank of Baroda added that if this trend persists, emerging market assets, including India’s, could see a sustained recovery in foreign portfolio investment. India’s strong macroeconomic position, stable political environment, and promising growth outlook make it an attractive investment destination, the report said.
Still, the outlook remains sensitive to geopolitical developments. “Any deterioration in global trade relations could impact investor sentiment and weigh on the rupee,” the bank cautioned.
