The INR to AUD exchange rate is currently range-bound, trading slightly below its recent three-month average.
Key drivers include a growing interest rate differential, as the Reserve Bank of Australia is expected to raise rates while India’s monetary policy remains relatively stable. This could support the Australian dollar. Additionally, Australia's positive economic outlook may bolster the AUD amid recovery efforts following the pandemic. In contrast, concerns over India's economic growth and projected depreciation of the INR also weigh on its value against the AUD.
The near-term trading range for this exchange rate could remain within a stable spectrum, reflecting broader economic conditions.
Upside risks for the INR include potential improvements from trade negotiations between India and the U.S., while downside risks involve rising foreign portfolio outflows from India, potentially leading to further INR weakness.