Rupee Rebounds: INR Opens Stronger at 85.6475/USD Amid Oil Price Relief and Rate Cut Hopes

The Indian rupee opened 0.06% higher at 85.6475 per US dollar on July 2, 2025, recovering from its previous close of 85.7025. The uptick comes as global oil prices continue to soften, easing pressure on India’s import bill and supporting emerging market currencies like the INR.

 

The rupee’s strength is also buoyed by expectations of further interest rate cuts by the Reserve Bank of India (RBI), following a sharper-than-expected drop in headline inflation to a six-year low. Analysts anticipate that the RBI may continue its dovish stance, which has already seen three consecutive rate cuts in recent months.

 

Geopolitical calm in the Middle East—particularly the non-escalation between Israel and Iran—has kept crude flows uninterrupted through the Strait of Hormuz, driving oil prices lower and improving India’s trade dynamics. This has reduced the need for Indian refiners to sell rupees for dollar purchases, offering short-term support to the currency.

 

Key Highlights:

 

Opening Rate: ₹85.6475/USD, up 0.06% from previous close.

 

Oil Price Impact: Lower crude prices ease capital outflow risks.

 

RBI Outlook: Rate cuts expected amid cooling inflation.

 

Geopolitical Stability: No fresh escalation in Middle East tensions.

 

12-Month View: INR still down 2.63% YoY, but showing signs of recovery.

 

With foreign portfolio inflows stabilizing and macro indicators improving, the rupee may continue to trade in a narrow range unless global risk sentiment shifts dramatically.

 

Sources: Trading Economics, Google Finance, Bloomberg