CAD/INR Outlook:
The CAD/INR pair is slightly positive and likely to move sideways, as the exchange rate is currently above its 90-day average but lacks a clear driver for significant movement.
Key drivers:
• Rate gap: The Bank of Canada's cautious monetary policy contrasts with the Reserve Bank of India's more flexible approach, putting upward pressure on the CAD.
• Risk/commodities: A surge in oil prices, currently at 90-day highs, supports the Canadian dollar due to its status as a key export for Canada.
• One macro factor: India's ongoing trade deficit and capital outflows have posed challenges for the INR, exerting downward pressure on its value.
Range:
The CAD/INR is likely to drift within its recent range as factors influencing both currencies keep movements stable.
What could change it:
• Upside risk: An unexpected rise in Canada's retail sales could boost the CAD further.
• Downside risk: Renewed geopolitical tensions affecting India may lead to further INR depreciation.