EUR/INR Outlook:
The EUR/INR is slightly positive, currently trading just above its 90-day average and within a stable range. Lack of a clear driver suggests movement may remain sideways.
Key drivers:
• Rate gap: The European Central Bank's cautious policy amid rising energy costs contrasts with the Reserve Bank of India's focus on managing growth through currency depreciation.
• Risk/commodities: The recent spike in oil prices could increase inflation risks in the Eurozone, negatively impacting the euro against the rupee.
• One macro factor: Ongoing geopolitical tensions have prompted investors to seek refuge in safe havens, putting additional pressure on the euro.
Range:
Expect the EUR/INR to hold within its recent 3-month range due to mixed signals and external pressures.
What could change it:
• Upside risk: A decrease in oil prices could alleviate inflation concerns, supporting the euro.
• Downside risk: Continued U.S. capital inflows could weaken the rupee further, exerting pressure on the euro.