The exchange rate outlook for the Indian Rupee (INR) against the Canadian Dollar (CAD) is currently shaped by a dynamic mix of economic challenges in India and the impacts of oil prices on the Canadian economy.
Recently, the INR has reached a historic low of 90.42 per U.S. dollar, driven by factors such as a widening trade deficit, outflows of foreign investments, and a significant depreciation over the past year. Analysts have indicated that the Reserve Bank of India (RBI) is allowing the rupee to weaken as it grapples with these challenges, prioritizing stability over a specific exchange rate level. Predictions from India’s largest private lender suggest that without a swift resolution to trade issues with the U.S., the rupee could fall further to 92 against the dollar, adding additional pressure on INR/CAD rates.
In contrast, the CAD has shown some resilience. Recent updates indicate that the loonie rebounded as oil prices increased, with the CAD benefiting from Canada’s status as a major oil exporter. Specifically, a rise in crude oil prices—up 1.5% to nearly $59.84 per barrel—has helped strengthen the CAD. Additionally, a stronger than expected GDP growth of 2.6% in Canada for the third quarter has bolstered confidence in the loonie. However, concerns persist with the manufacturing sector showing signs of contraction, as evidenced by a decline in the S&P Global Canada Manufacturing PMI to 48.4 in November.
Exchange rate trends indicate that INR to CAD has recently traded near 0.015371, approximately 2.4% below its 3-month average, remaining within a stable range of 0.015371 to 0.015989. This stabilization comes against a backdrop of CAD's close correlation with oil prices and a cautious outlook on Canadian economic performance, particularly considering the recent Bank of Canada rate cut signaling a more accommodative monetary stance.
Looking ahead, the INR's trajectory will be heavily influenced by domestic economic conditions, the trade deficit, and foreign investment dynamics, while the CAD will remain sensitive to oil market trends and Canadian economic indicators. As a result, those engaged in international transactions may need to keep a close eye on these developments while considering potential fluctuations in the INR/CAD exchange rate.
