The recent outlook for the exchange rate from CAD to INR showcases a complex interplay of factors affecting both currencies. Analysts note that the Canadian dollar (CAD) has been under pressure, primarily due to its correlation with the declining U.S. dollar. Predictions for the CAD indicate potential for a rebound if oil prices stabilize or rise, as Canada is a significant oil exporter and its economy is closely tied to oil revenue.
Recent monetary policy shifts, including rate cuts by the Bank of Canada, which lowered the key interest rate to 2.25%, have introduced further challenges for the CAD. This reduction is aimed at addressing a slowing job market and economic uncertainty, leading to a weaker Canadian dollar. Analysts emphasize that lower interest rates generally reduce the attractiveness of the CAD to foreign investors, which could dampen its strength against the Indian rupee (INR).
On the other hand, the Indian rupee has faced its own set of challenges, including reaching a record low against the U.S. dollar in late September. The Reserve Bank of India's interventions to stabilize the rupee, along with ongoing importer demand for dollars and concerns surrounding U.S. tariffs, continue to weigh heavily on the INR. Reports highlight a narrowing policy rate differential with the U.S., alongside weak manufacturing exports, which may sustain downward pressure on the rupee.
Current exchange data shows the CAD to INR is trading at 63.20, slightly below its 3-month average, and has maintained a stable range of 62.54 to 64.19. Meanwhile, oil prices are currently at 64.29, 2.1% below their 3-month average, revealing significant volatility with a range from 60.96 to 70.13. This fluctuation in oil prices directly influences the strength of the CAD due to Canada's reliance on oil exports.
Given these developments, CAD may face upward momentum against the INR if oil prices rally and stabilize, while the INR may continue to experience volatility amidst ongoing economic challenges in India. Therefore, traders and businesses should closely monitor these dynamics in the coming weeks to make informed decisions regarding international transactions.
