Currency Market Outlook: BoB Flags ₹84–85 Range — What It Means for Startups & MSMEs

The Indian rupee looks set to trade with an appreciating bias in the near term, as favorable domestic conditions and improving global sentiment converge, according to a recent report released by Bank of Baroda. The bank projects the rupee to move within a range of ₹84–85 per US dollar, supported by a weakening greenback, stable crude oil prices, and renewed foreign investment inflows.

“We expect INR to trade with an appreciating bias in the near term in the range of 84–85/USD. However, escalation in US-China trade relations poses a significant risk to our view,” the report cautioned.

What’s Fueling the Rupee’s Strength?

Bank of Baroda attributes the rupee’s positive outlook to a combination of global and domestic factors:

• Weaker US Dollar: The rupee gained 1.1% in April 2025, following a 2.4% rise in March, as the US dollar continued to weaken amid a slowing American economy.

• Lower Oil Prices: Global crude oil prices have remained stable, helping reduce India’s import bill and supporting the rupee’s upward trajectory.

• Revival in Foreign Inflows: After three consecutive months of outflows, foreign portfolio investors returned to Indian equity markets in April, signaling renewed global interest in emerging economies like India.

• Easing Trade Tensions: The United States softened its stance on trade tariffs and signaled progress in negotiations with key partners, easing global trade tensions and lifting investor confidence.

“India’s strong macroeconomic fundamentals, political stability, and growth prospects make it a favorable destination for global capital,” the report added, noting that emerging markets like India may continue to attract foreign inflows if current conditions persist.

Risks Remain on the Horizon

Bank of Baroda warned that rising tensions between the US and China could derail this trend. Any deterioration in global trade dynamics could dampen investor sentiment and put downward pressure on the rupee.

How a Stronger Rupee Affects MSMEs and Startups

As the rupee gains strength, India’s MSMEs and startups must assess both the opportunities and risks that come with currency appreciation. The impact varies widely depending on the sector and the nature of the business.

1. Importers Stand to Gain

MSMEs and startups that rely on imported raw materials, equipment, or software will likely benefit. A stronger rupee makes foreign goods and services cheaper, which can lower production costs and improve operating margins.

“A stable and appreciating rupee eases the cost burden for MSMEs importing machinery or components, especially in manufacturing and healthtech,” said a trade analyst.

2. Exporters Face Margin Pressure

Export-oriented MSMEs in sectors like textiles, leather, or handicrafts, as well as SaaS startups serving global clients, may suffer from shrinking revenue when converted to rupees. A stronger rupee makes Indian goods and services more expensive on the global market, potentially hurting competitiveness.

3. Foreign Investors Show Renewed Interest

Currency stability enhances India’s appeal to global investors. As the rupee firms up, growth-stage startups could find it easier to raise capital from venture funds, private equity players, and global institutions.

“Currency volatility is a red flag for many international investors. A strong and stable rupee reduces risk and boosts India’s investment narrative,” noted a venture capital partner.

4. Operating Costs for Global Tools Fall

Startups that spend heavily on international platforms—cloud services, ad campaigns, SaaS tools, and international business travel—will benefit from lower costs. Cross-border expansion becomes more affordable when the rupee holds firm against the dollar.

5. Strategic Vigilance Still Necessary

Despite the upside, MSMEs and startups must stay alert. Sudden changes in global trade policy, a spike in oil prices, or geopolitical shocks could reverse currency gains. Businesses exposed to forex risk should explore hedging strategies and diversify markets where possible.

A Window of Opportunity, But Stay Watchful

Bank of Baroda’s report positions the rupee on solid footing in the near term. The combination of global tailwinds, investor optimism, and domestic resilience paints a positive picture for India's economy. For MSMEs and startups, this is a window of opportunity—to import smartly, expand globally, and attract investment.

But with global uncertainties still looming, success will depend on how well businesses adapt to shifting forex dynamics and protect against potential volatility.