The INR to JPY exchange rate shows a bearish bias, reflecting pressure on the Indian Rupee.
Key drivers include:
• The Bank of Japan's recent interest rate hike to curb inflation signals a stronger JPY compared to a weakening INR influenced by broader economic factors.
• Current oil prices, trading at seven-day lows, affect both currencies, with lower oil prices generally benefiting the JPY as Japan is a significant oil importer.
• India's economic growth, while generally positive, is coupled with inflation concerns that weaken the INR's position around the JPY.
In the near-term, the exchange rate may trade within a stable range, reflecting current market conditions with limited volatility.
Upside risks to the INR could arise from a potential recovery in global risk sentiment, while downside risks remain related to foreign portfolio outflows and the pace of rate adjustments by the Reserve Bank of India.