The Canadian dollar (CAD) has shown resilience, recently bolstered by better-than-expected GDP figures. As of November, the CAD is holding near 60-day highs at approximately 63.96 INR, slightly above its three-month average of 63.42 INR, navigating a stable range of 62.54 to 64.19 INR. Analysts suggest that positive movements in the CAD are linked to its strong correlation with oil prices, given Canada’s status as a major oil exporter. However, recent fluctuations in oil prices—trading at 63.30 USD, 2.5% below its three-month average—indicate volatility that may influence the CAD's trajectory.
Looking ahead, there are several development factors that could impact the CAD’s value against the INR. The Bank of Canada has reduced its key policy interest rate to a three-year low of 2.25%, signaling a cautious stance amid concerns over a weakening job market and broader economic uncertainties. Such rate cuts could suppress the loonie, as economists note that lower interest rates tend to drive investments away from the currency.
On the other hand, U.S. labor market stresses—evident from significant job cuts—have led to increased expectations for a Federal Reserve rate cut, indirectly lending support to the CAD. The strong relationship between Canada and the U.S., which constitutes around 75% of Canada’s exports, remains a pivotal factor for the loonie’s performance.
For the Indian rupee (INR), recent developments paint a challenging picture. The rupee has reached an all-time low against the US dollar and faces ongoing pressure from domestic economic conditions, including weak manufacturing exports and challenges linked to foreign direct investment. The Reserve Bank of India's recent interventions aim to stabilize the rupee, but strong demand from importers and a narrow interest rate differential with the U.S. will likely keep the INR under pressure.
In this complex landscape, market observers are closely monitoring the interplay between CAD and INR, considering the impacts of global economic trends, commodity prices, and central bank policies. The forecasted path for both currencies suggests continued volatility in international transactions, urging stakeholders to stay vigilant regarding exchange rate movements.
