What are CAD to INR forecasts?
The Canadian Dollar (CAD) experienced some instability in recent trade sessions due to weaker oil prices and fluctuating USD. However, these factors were counterbalanced by an uptick in USD, with which CAD has a positive correlation. In the coming days, the market will be watching for the release of Canada's Producer Price Index (PPI) data from April, which may have an impact on the CAD. FX analysts are speculating whether another rise in producer prices could prompt the Bank of Canada (BoC) to tighten monetary policy once again.
While the Canadian Dollar has struggled against the US Dollar in the past, this has been mainly due to risk environments in financial markets, rather than the fundamentals in the US and Canada. Both economies are strongly correlated, and continued housing price declines and adverse wealth effects could put more negative pressure on the Canadian Dollar in 2023. On the other hand, the Indian Rupee has consistently weakened against the US Dollar, mainly driven by fears of increasing energy prices stimulating inflation and interest rate hikes. As India heavily relies on oil imports, the higher crude prices tend to increase domestic inflation. Economists believe that the unexpected OPEC+ cut to oil production in April may negatively impact the Rupee.
Taking into account the CADINR price data for the previous three months, the current CAD to INR rate of 60.58 is quite close to its 3-month average. Within that time, the rate has exhibited stability, trading within a narrow 3.8% range from 59.14 to 61.39. In the short term, market participants will be closely monitoring the Canadian PPI data and other related catalysts to gauge the potential future direction of the CAD to INR exchange rate.