The market bias for the INR to CAD exchange rate is currently bearish.
Key drivers include the interest rate differential, with the Bank of Canada maintaining a steady rate while the Reserve Bank of India may face pressure to adjust rates amid weakening forecasts for the INR. Recent strong job growth in Canada supports a more favorable outlook for the CAD. Additionally, fluctuating oil prices, currently at 30-day highs, impact the CAD positively, given its ties to the oil-exporting economy.
In the near term, the exchange rate may trade within a consolidated range, slightly lower than recent highs, facing upward resistance due to the CAD's strength.
Upside risks include a potential US-India trade deal that increases demand for the INR, while downside risks stem from continued foreign portfolio outflows from India, which may further weaken the INR.