The Canadian dollar (CAD) has recently shown a recovery, attributed primarily to increasing oil prices, which are critical for Canada’s energy-export-driven economy. As of December 4, 2025, the CAD traded near a 90-day high of 65.06 against the Indian rupee (INR), representing a 2.5% increase over its three-month average of 63.48. Analysts suggest that the CAD's performance is closely tied to fluctuations in oil prices, given Canada's status as a major oil exporter. Current oil prices are at a two-week peak of $63.75 per barrel, which, despite being slightly below the three-month average, has fueled positive market sentiment towards the Canadian dollar.
The focus remains on Canada’s employment data, expected to reveal an uptick in unemployment from 6.9% to 7%, which could pose a risk to the CAD's upward momentum. Furthermore, the Bank of Canada’s recent decision to cut interest rates by 25 basis points has introduced a degree of uncertainty, indicating potential adjustments to monetary policy in response to economic conditions.
In contrast, the Indian rupee (INR) has faced significant downward pressure, recently hitting a record low of 90.42 per U.S. dollar. This depreciation is driven by a widening trade deficit, exacerbated by a 50% tariff on exports and substantial foreign investment outflows. The Reserve Bank of India has communicated a shift in focus, allowing for a weaker rupee while managing volatility rather than defending specific exchange rates.
With CAD standing strong, and any potential recovery in the INR facing key headwinds, market participants should watch upcoming economic data closely. The interplay of oil prices, Canadian economic indicators, and Indian fiscal policies will be crucial in influencing the CAD/INR exchange rate in the near term.
