The EUR to INR exchange rate remains influenced by a mix of Eurozone economic conditions and factors impacting the Indian rupee. Recent forecasts noted that the euro (EUR) gained some strength, aided by market risk aversion linked to a downturn in global equities. Although Eurozone inflation eased to 2.1% in October, the European Central Bank (ECB) is expected to adopt a more dovish stance, signaling potential rate cuts from the current 4.0% to 3.5% by late 2025. This change could narrow the interest rate differential with the U.S. Federal Reserve, affecting the euro's value against currencies like the INR.
On the other hand, the Indian rupee (INR) has faced significant downward pressure, recently hitting a record low against the U.S. dollar. Factors contributing to the INR's weakness include persistent importer demand for dollars, geopolitical tensions, and a narrowing policy rate differential with the U.S. Recent Reserve Bank of India's interventions aimed at stabilizing the INR have had limited success, as continued foreign equity outflows further strain the currency.
The EUR to INR exchange rate currently stands at 102.1, reflecting a stability of just 0.9% below its three-month average of 103. This reflects a narrow trading range between 101.3 and 104.9 over the same period. Given the fluctuations in global oil prices, with crude trading at 63.66, which is 2.9% below its three-month average, the potential for economic volatility looms. Oil price movements can impact both the euro and the rupee, especially considering Europe’s energy dependencies and India’s importation of oil.
Combining these elements indicates a cautious outlook for the EUR to INR exchange rate. The euro's strength may be tempered by the ECB's more accommodating monetary policy while the INR's ongoing challenges could limit its ability to strengthen against the euro in the near term. Analysts suggest that the interplay between these economic factors will be critical in determining exchange rate movements going forward.
