Indian Rupee Opens Stronger Against US Dollar

The Indian Rupee started the day at 84.65 against the US dollar on Tuesday, a slight increase from its previous close of 85.38.

Market analysts anticipate that the trading range for today will be between 84.50 and 85.25. The dollar has continued to gain strength following a significant trade agreement between the US and China.

The US plans to reduce tariffs on Chinese goods from 145% to 30% within 90 days, while China will lower tariffs on US products from 125% to 10%. Additionally, both nations aim to create a system for ongoing discussions regarding their economic and trade relationships.

Experts suggest that recent developments in global politics could significantly influence the rupee’s trajectory.

In fiscal year 2015, the rupee fluctuated between 83.10 and 87.6 against the dollar. It initially weakened due to the outcomes of the US elections, coupled with foreign portfolio investment (FPI) outflows and a robust dollar, leading to a 2.4% annual depreciation.

Despite these hurdles, the rupee demonstrated relative stability, thanks to healthy government finances, decreasing current account deficits, easing oil prices, and improved liquidity, as noted in the NSE’s “Market Pulse Report” for April.

By the end of the year, renewed FPI inflows and dollar strength aided the rupee’s recovery, which appreciated by 2.4% in March 2025.

The average annual volatility of the rupee dropped to 2.7% in FY25, making it the most volatile among major emerging market currencies, underscoring India’s strong external buffers and proactive forex management.

Nonetheless, some analysts believe the rupee is still overvalued, with the weighted real effective exchange rate (REER) for 40 currencies rising to 105.3. Both REER and nominal effective exchange rates (NEER) have gradually decreased since the first half of FY25, reflecting shifting premium dynamics and greater resilience in India’s economy.