AUD/INR Outlook:
Slightly positive, but likely to move sideways, as the rate is trading above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia's recent rate hike has strengthened the AUD compared to the Reserve Bank of India's slower rate adjustments.
• Risk/commodities: The oil price trend remains elevated, supporting demand for Australian exports, which typically boosts the AUD.
• One macro factor: Australia's CPI surpassed the RBA's target, increasing expectations for further monetary tightening, which supports the AUD's strength.
Range:
Expect the AUD/INR to drift within the recent three-month range, as gains may be limited without a new significant catalyst.
What could change it:
• Upside risk: A significant increase in demand for Australian commodities could further bolster the AUD against the INR.
• Downside risk: An escalation in geopolitical tensions could weaken investor sentiment and pressure the INR lower.