INR/HKD Outlook:
The outlook for INR/HKD is likely to move sideways, as the exchange rate is near its recent average and within a narrow trading range. Current drivers do not indicate significant upward or downward momentum.
Key drivers:
• Rate gap: The Reserve Bank of India's flexible exchange rate policy is helping the INR adjust gradually against the Hong Kong dollar amid ongoing global uncertainties.
• Risk/commodities: The recent fluctuations in oil prices may impact the INR, as India is a significant oil importer; any rise in oil prices could add pressure on the currency.
• One macro factor: Ongoing geopolitical tensions between India and Pakistan are heightening risk aversion, resulting in increased demand for safer assets and affecting the INR's performance.
Range:
The INR/HKD is likely to hold within its stable 3% range, reflecting the current market conditions.
What could change it:
• Upside risk: A significant improvement in India's trade figures or a reduction in geopolitical tensions could support INR appreciation.
• Downside risk: Continued capital outflows or surging oil prices could pressure the INR and lead to further depreciation.
