After closing at 85.38 a dollar on Tuesday, the Indian rupee began 75 paise higher at 84.65 vs the US dollar.

Analysts predicted that the day’s trading range will be between 84.50 and 85.25. After the US and China signed a major trade agreement, the dollar continued to rise.

China said that it will lower tariffs on US imports from 12% to 10% for 90 days, while the US would lower taxes on Chinese goods from 145% to 30%. The two nations will set up a system to carry on their conversations over trade and economic ties.

Analysts predict that the direction of the rupee will be significantly impacted by any new events on the geopolitical front.

Due to ongoing FPI outflows and a strong US dollar, the rupee depreciated by 2.4% throughout the course of FY25, first declining after the outcome of the US election. It fluctuated between 83.10 and 87.6 versus the US dollar.

The NSE’s “Market Pulse Report” for April states that despite these difficulties, the rupee held steady in relation to other world currencies, helped by a number of factors, including better liquidity, a decreasing current account deficit, robust government finances, and lowering oil prices.

The rupee recovered at the end of the year, rising 2.4% in March 2025, thanks to a reversal in dollar strength and fresh FPI inflows into debt.

As one of the least volatile major emerging market currencies, the rupee’s average annualized volatility dropped to 2.7% in FY25, underscoring India’s robust external buffers and prudent foreign exchange management.

Though both REER and NEER steadily decreased from H1FY25, suggesting an easing of overvaluation, the rupee remained overpriced, with the 40-currency trade weighted REER climbing to 105.3. The research said that India’s macroeconomic resiliency and shifting premium dynamics were reflected in the rupee’s one-year forward premium, which continued to decline.