CAD/INR Outlook:
The CAD/INR exchange rate is slightly positive, but likely to move sideways as it is currently trading above its recent average and lacks a clear driver for a significant movement.
Key drivers:
- Rate gap: The Bank of Canada’s lower interest rates compared to the Reserve Bank of India’s flexible policy gives the INR an upper hand.
- Risk/commodities: Oil prices are significantly above average, benefiting the CAD and supporting its value, although volatility persists.
- One macro factor: India's trade agreement with the U.S. has boosted exports, supporting the INR's strength.
Range:
The CAD/INR is likely to drift around its current level within the recent 3-month range, with fluctuations expected due to external factors.
What could change it:
- Upside risk: A recovery in oil prices could further support the CAD.
- Downside risk: Continued geopolitical tensions in South Asia may drive the INR lower against the CAD.