CAD/INR Outlook:
Slightly positive, but likely to move sideways, as the rate is above its average but lacks clear support from current drivers.
Key drivers:
• Rate gap: The Bank of Canada’s cautious stance on interest rates contrasts with the Reserve Bank of India’s (RBI) flexible intervention strategy, affecting both currencies differently.
• Risk/commodities: Despite oil prices recently dropping, they remain high compared to their average, which may bolster the CAD due to its strong ties to oil exports.
• Macro factor: The ongoing trade tensions between Canada and the U.S. could increase volatility for the CAD, impacting its value.
Range:
Expect the CAD/INR to hold steady within its recent range, given current price stability.
What could change it:
• Upside risk: A significant rebound in oil prices could strengthen the CAD further.
• Downside risk: Continued FPI outflows from Indian markets may weaken the INR, impacting the exchange rate.