The Indian rupee is projected to trade steadily in the Rs 85–87 range against the US dollar throughout 2025, according to a new report from the State Bank of India (SBI). The report cites both domestic resilience and global monetary trends as key contributors to this anticipated stability.
SBI attributes this outlook to the moderating strength of the US dollar, influenced by the expected decline in the DXY index—a measure of the dollar’s performance against a basket of major currencies. This trend is likely to support emerging market currencies, including the Indian rupee, as the US economy adjusts to the impact of recently imposed tariffs.
“The domestic impact of tariffs on the dollar will be visible in 2025, which will support the rupee,” the report noted. It also highlighted that the Non-Deliverable Forward (NDF) market for USD/INR is already pricing in limited volatility, with the May 2026 contract suggesting a rate around Rs 85.87 to Rs 86 per USD.
Macroeconomic indicators in the US further support this outlook. The report noted that annual inflation eased to 2.4% in March 2025, and nonfarm payrolls increased by 177,000 in April, with the unemployment rate steady at 4.2%. However, it warned that the full inflationary impact of US tariffs may still be unfolding, with future data potentially revealing upward pressure on prices.
Despite this, SBI anticipates that the US Federal Reserve is likely to maintain current interest rates through its next two policy meetings. “A pause signal is unequivocal based on recent statements,” the report added, referencing the Fed’s dual focus on inflation and employment.
With a steady Fed stance, easing inflationary trends, and the influence of global trade dynamics, SBI concluded that conditions remain favorable for the rupee’s relative stability through the upcoming year.