The Canadian dollar (CAD) has recently experienced a decline, largely attributed to the unveiling of Canada’s federal budget, which did not significantly encourage the market. According to analysts, the CAD may continue to face pressure, particularly with upcoming economic data, such as the Ivey PMI for October, which is expected to show a slowdown in activity.
Recent CAD performance against the Indian rupee (INR) has reached 7-day lows near 62.78, which is 1.0% below its three-month average of 63.43. This indicates a stable trading range; the CAD has fluctuated between 62.54 and 64.19 over the past months, reflecting relatively low volatility. Factors such as recent speculation around potential rate cuts by the U.S. Federal Reserve have provided some support for the loonie against the U.S. dollar, which has indirectly stabilized the CAD as well.
However, the CAD remains vulnerable to several risks. A notable decrease in oil prices, with Brent crude trading at 14-day lows of approximately 63.49, significantly impacts the CAD, given Canada’s status as a major oil exporter. Analysts point out that a fall of 3.6% below the three-month average of 65.92 raises concerns for the currency as it traditionally moves in tandem with oil prices.
On the Indian side, the rupee has seen volatility but was recently stabilized by the Reserve Bank of India's interventions, where it sold between $3 billion to $5 billion in currency markets. This maneuver resulted in the rupee's strongest gain in four months, improving market sentiment towards the INR.
Trade tensions between India and the U.S. have also introduced challenges for the INR. The imposition of significant tariffs by the U.S. has affected export prospects and created uncertainty over U.S.-India trade relations, contributing to fluctuations in the rupee’s value.
Overall, analysts predict that the CAD to INR exchange rate will be influenced by concurrent developments in oil prices, central bank policies in both Canada and India, and broader global economic conditions. Observers are urged to monitor not only regional economic indicators but also shifts in commodity markets to forecast potential movements in this exchange rate more accurately.
