INR/EUR Outlook:
The INR/EUR pair is likely to decrease as it trades significantly below its recent average and is at 14-day lows. The pressure is compounded by geopolitical tensions affecting the Indian economy.
Key drivers:
• Rate gap: The Reserve Bank of India's move towards a flexible exchange rate contrasts with the European Central Bank's steady interest rate, affecting the INR negatively.
• Risk/commodities: Current high oil prices could worsen India's trade balance, keeping the INR under pressure.
• One macro factor: The Comprehensive Trade Partnership has boosted India's exports, but ongoing geopolitical tensions continue to create instability.
Range:
The INR/EUR is expected to drift within its recent 3-month range, with limited upward movement.
What could change it:
• Upside risk: A significant easing of geopolitical tensions could support the INR's value.
• Downside risk: Continued high oil prices may further weaken the INR against the Euro.