HKD/INR Outlook:
The HKD/INR exchange rate is slightly positive and likely to move sideways, trading just above its recent average and not significantly deviating from its established 3-month range.
Key drivers:
• Rate gap: The consistent intervention by the Hong Kong Monetary Authority to support the HKD contrasts with the Reserve Bank of India's more flexible exchange rate policy affecting the INR.
• Risk/commodities: Global oil price volatility pressures India's trade balance, impacting INR demand as higher oil prices lead to increased dollar demand.
• One macro factor: The recent trade agreement between the US and India has boosted Indian exports, supporting the INR's strength.
Range:
Expect the HKD/INR to remain stable within its recent range of 11.48 to 11.80.
What could change it:
• Upside risk: Further intervention by the HKMA to stabilize the HKD could lead to appreciation against the INR.
• Downside risk: Escalation in geopolitical tensions could weaken the INR, affecting the exchange rate negatively.