The Canadian dollar (CAD) has been experiencing mixed signals in recent weeks, primarily influenced by fluctuations in oil prices and key economic indicators. As of December 4, 2025, the CAD is trading at 64.95 INR, which is 1.9% above its three-month average of 63.75 INR. This increase can be attributed to a modest rise in oil prices, which have seen a 1.5% uptick, benefiting Canada’s economy as a major oil exporter. However, oil prices are currently volatile, trading at $60.83 per barrel, around 4.5% below their three-month average of $63.69, and have varied significantly between $59.04 to $70.13 in the recent past.
Currently, a favorable GDP growth figure in Canada at 2.6% for Q3 is bolstering investor sentiment towards the loonie. However, the Bank of Canada's recent decision to cut interest rates by 25 basis points to 2.25% suggests a cautious outlook and may limit further appreciation of the CAD. Additionally, ongoing contraction in the manufacturing sector, as indicated by the S&P Global Canada Manufacturing PMI dropping to 48.4, poses a further challenge for the CAD’s strength.
In contrast, the Indian rupee (INR) is facing headwinds, having hit a record low of 90.42 against the U.S. dollar, largely due to a widening trade deficit exacerbated by high tariffs on exports. Foreign investment outflows have further pressured the rupee, with nearly $17 billion withdrawn from Indian equities this year. The Reserve Bank of India (RBI) is permitting some depreciation of the rupee as it grapples with managing volatility in response to its economic challenges.
The interplay between these currencies suggests that while the CAD may find some support in oil price movements and economic growth data, the INR is under significant pressure due to structural economic issues and policy adjustments. Analysts indicate that any future movements in the CAD/INR exchange rate will likely hinge on developments in both the Canadian economy, particularly oil prices, and the external pressures facing the Indian rupee. As such, traders and businesses should keep a keen eye on these indicators when planning international transactions.
