HKD/INR Outlook:
The HKD/INR exchange rate is likely to move sideways as it trades near its recent average and within a stable range. Signals are mixed, influenced by developments in both Hong Kong and India.
Key drivers:
• Rate gap: The Hong Kong Monetary Authority's active interventions have aimed to stabilize the HKD, while the Reserve Bank of India’s flexible exchange rate policy allows the INR to manage external pressures.
• Risk/commodities: Global oil prices have remained volatile, which can indirectly affect both currencies depending on import prices and trade balances.
• One macro factor: India's trade deficit continues to weigh on the INR, as foreign portfolio outflows signal ongoing investor caution.
Range:
Expect the HKD/INR to hold within its recent 3-month range as the lack of strong directional drivers keeps price movements subdued.
What could change it:
• Upside risk: A significant rebound in China's economic activity could increase demand for HKD.
• Downside risk: Further geopolitical tensions could create more risk aversion, leading to increased demand for the US Dollar and putting pressure on the INR.
