The exchange rate forecast for CAD/INR remains influenced by various domestic and international factors. Analysts note that the Canadian dollar (CAD) has shown muted performance recently despite a rebound in oil prices, a critical driver of the CAD's value as Canada is one of the world's largest oil exporters. Current market data indicates the CAD is trading at approximately 63.54 INR, slightly above its three-month average, within a stable range of 62.54 to 64.19 INR.
Looking ahead, the Bank of Canada has implemented rate cuts, bringing the key policy interest rate down to 2.25%. These actions, taken to counteract economic uncertainties and a weakening job market, could lead to a further depreciation of the CAD if the economic landscape continues to falter. However, the recent strong U.S. labor market data, citing significant job cuts, has provided some indirect support for the CAD by weakening the U.S. dollar, a factor that traders are watching closely.
Oil price movements are expected to remain significant in determining the CAD's trajectory. With current oil prices at 62.56 USD, they are notably 4.4% below the three-month average, indicating a volatile environment where increases or sustained high prices could lend support to the CAD. However, fluctuations in oil demand and prices can either strengthen or weaken the CAD substantially based on market sentiment.
In contrast, the Indian rupee (INR) faces its own challenges, recently hitting a record low against the U.S. dollar. Factors like increased U.S. visa fees and reduced foreign equity inflows have compounded pressures on the INR. The Reserve Bank of India's interventions to stabilize the rupee through short dollar forward positions illustrate ongoing concerns regarding its value. The weak performance of manufacturing exports and a narrowing policy rate differential with the U.S. are further factors to be considered, potentially leading to continued downward pressure on the INR.
Overall, the CAD/INR exchange rate will be influenced by the interplay of commodity price movements, domestic monetary policies, and the broader economic outlook in both Canada and India. Investors and businesses engaged in international transactions involving these currencies may want to monitor these developments closely to make informed decisions and potentially mitigate costs.
