EUR/INR Outlook:
Slightly positive, but likely to move sideways, as the euro is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The European Central Bank (ECB) has maintained interest rates amid economic resilience, while the Reserve Bank of India (RBI) grapples with a persistent current account deficit that pressures the rupee.
• Risk/commodities: Oil prices are currently at 90-day highs, which could affect the euro due to its sensitivity to energy costs and the eurozone's reliance on imports.
• One macro factor: Weak manufacturing exports in India are contributing to the rupee's ongoing challenges, impacting its value against the euro.
Range:
EUR/INR is likely to drift within a stable range, given its current position above the average.
What could change it:
• Upside risk: If geopolitical tensions ease, it may boost the euro's stability.
• Downside risk: Further FPI outflows could increase pressure on the rupee, leading to a weaker exchange rate.