CAD/INR Outlook:
The CAD/INR rate is likely to increase as it trades above its recent average, supported by strong oil price performance. Recent trends show the CAD gaining traction, benefiting from improving commodity values.
Key drivers:
• Rate gap: The Bank of Canada maintains a higher policy rate compared to the Reserve Bank of India's flexible exchange rate approach, making CAD more attractive for investors.
• Risk/commodities: With oil prices significantly above their recent averages, there's heightened support for the CAD, benefiting from its status as a major oil exporter.
• One macro factor: The U.S. decision to ease tariffs may boost Canadian exports, further strengthening the economic outlook for the CAD.
Range:
The CAD/INR rate is likely to drift upward within its recent 3-month range, finding support from continued strength in oil prices.
What could change it:
• Upside risk: A further surge in oil prices could drive the CAD even higher.
• Downside risk: A significant drop in oil prices might weaken the CAD's position against the INR.