NZD/INR Outlook:
The outlook is slightly positive, but likely to move sideways as the NZD is above its recent average but lacks a clear driving force.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is likely to cut interest rates soon, which may pressure the NZD compared to the Reserve Bank of India, which has maintained its rates.
• Risk/commodities: High dairy prices continue to support New Zealand's exports, providing some backing for the NZD amidst mixed market conditions.
• One macro factor: Ongoing concerns in the Indian economy, including a persistent current account deficit, are putting further pressure on the INR.
Range:
Expect the NZD/INR to hold within the recent range, likely drifting as market trends fluctuate.
What could change it:
• Upside risk: A surprise increase in interest rates from the RBNZ could boost the NZD.
• Downside risk: Continued FPI outflows from India could lead to further INR depreciation, impacting the NZD/INR rate.