Bias: CAD/INR is bullish-to-range-bound, trading above the 90-day average and in the upper half of the 3-month range, implying limited upside unless oil and macro signals turn consistently supportive.
Key drivers:
- Rate gap: BoC’s easy stance contrasts with RBI’s active rupee defence, tilting the backdrop toward CAD as Canadian policy stays supportive while India acts to stabilise the rupee.
- Risk/commodities: Oil sits near a recent high with swings, supporting CAD via Canada’s oil export link and adding volatility to the CAD/INR dynamic.
- Macro: India’s widening trade deficit and tariff pressures weigh on INR and could feed broader risk-off moves if negotiations stall amid policy shifts.
Range: CAD/INR is likely to drift within the 3-month range, with a test of the upper end if oil sustains gains and risk appetite improves.
What could change it:
- Upside risk: oil rally or stronger Canadian data could push CAD higher.
- Downside risk: INR weakness deepens if India’s trade deficit widens and RBI continues FX intervention amid a broader risk-off.
