The market for the INR to EUR exchange rate is currently bearish.
Key drivers include the interest rate differential, as the European Central Bank maintains a flexible stance while India's Reserve Bank is pressured by potential currency depreciation. The rising oil prices, currently near highs, may exacerbate inflationary pressures in India. Additionally, India's projected economic growth contrasts with ongoing geopolitical tensions affecting the euro, creating uncertainty for both currencies.
In the near term, the INR is expected to trade in a stable range relative to the EUR, showing slight fluctuations around current levels. Upside risks to this forecast include the potential stabilization of geopolitical tensions, which could support the euro. Conversely, persistent inflation in India, potentially leading to a weaker INR, poses a downside risk that may drive further losses.
Overall, the outlook suggests cautious monitoring of developments in both economies will be essential for those engaged in currency transactions.