The market outlook for the INR to HKD exchange rate leans bearish, with the Indian Rupee showing signs of potential weakness.
Key drivers include:
- Interest rate differentials may impact the INR's performance, as expectations vary for the Reserve Bank of India's approach compared to Hong Kong's stable monetary policy.
- Recent forecasts suggest significant depreciation of the INR, with predictions for it to approach 90 per USD by March 2026.
- Hong Kong's inflation is projected to remain low, which supports a stable HKD.
Near-term, the INR to HKD exchange rate is expected to trade within a defined range, slightly below its three-month average.
Upside risks include unexpected positive economic developments in India, such as improved trade negotiations. Conversely, a downside risk is the potential for further foreign investment outflows from India, which could amplify the Rupee's decline.