Recent developments have led to a complex outlook for the Canadian dollar (CAD) against the Indian rupee (INR). The CAD closed at 63.33 INR, representing a 1.3% increase over its three-month average of 62.51, suggesting some relative strength. However, concerns over U.S. tariffs on Canadian goods, recently raised to 35%, have created headwinds that could hinder further appreciation of the 'loonie.' Analysts point out that persistent trade tensions are likely to weigh on the CAD, particularly as Canada faces retaliatory measures that could destabilize export dynamics.
In contrast, the Indian rupee is experiencing mixed influences. Its value has remained under pressure due to fears of rising energy prices, which threaten inflation and potential interest rate hikes in India. The rupee's steady weakening against the U.S. dollar highlights a broader trend affecting Asian currencies amid uncertainty about U.S. trade policies under President Trump. Market participants note that even typically stable currencies like the INR may experience volatility due to external factors, including tariffs and geopolitical risks.
The recent performance of oil prices plays a critical role in determining the CAD's trajectory. Currently, oil is priced at 69.30 USD per barrel, which is 1.7% above its three-month average of 68.15. Given Canada’s status as one of the largest oil exporters, fluctuations in oil prices can significantly impact the CAD’s strength. With oil trading within a volatile range, analysts warn that any downturn could negate recent gains for the CAD.
Overall, the balance of risks appears to be shifting for both currencies. For the CAD, new tariffs and ongoing trade tensions with the U.S. raise uncertainties, while the INR faces potential fallout from inflationary pressures associated with higher oil prices. As these factors unfold, markets will closely monitor geopolitical dynamics and economic indicators that could further influence the CAD to INR exchange rate.