The current market bias for the CAD to INR exchange rate is bearish.
Key drivers include:
- The interest rate differential remains limited as both the Bank of Canada and the Reserve Bank of India maintain cautious policy stances, dampening significant currency movements.
- Recent Canadian job growth has bolstered confidence in the CAD, while projected weakness in the INR due to expected depreciation against the US dollar adds selling pressure.
- Oil price fluctuations are also notable, with recent prices trading below the three-month average, potentially impacting the CAD's strength given its ties to energy exports.
In the near term, the exchange rate may remain within a stable range driven by external factors, though it currently sits near a 30-day low.
Upside risks include a sharp rise in oil prices boosting the CAD. Downside risks stem from worsening global economic sentiments that could weaken the INR further, impacting the exchange rate negatively.