Forex▲ Bullish
CAD/INR Tests 68.67 as Oil Rally Widens Rate Differentials
CAD/INR tests 68.67 resistance as oil's rally boosts Canada's export receipts and widens India's import bill. BoC expected to hold rates at 2.25% on Wednesday.
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The Canadian dollar rallied for a fourth straight session against the Indian rupee on Tuesday, pushing the CAD/INR pair toward 68.67 resistance. The move came as Brent crude climbed above $90 a barrel after renewed geopolitical tensions in the Middle East threatened supply routes through the Strait of Hormuz.
Canada's oil sands hold the world's second-largest reserves, making the Canadian dollar sensitive to energy prices. India imports roughly 85% of its crude oil, the world's third-largest volume. Higher oil costs widen India's current account deficit and increase demand for dollars to pay for imports. The opposing dynamics have made the CAD/INR a direct proxy for crude direction in recent weeks.
The Bank of Canada meets Wednesday. Markets expect the central bank to hold its overnight rate at 2.25%, pausing after three consecutive cuts earlier this year, traders said. The hold reflects policymakers' concern that inflation has not fully retreated below the 2% target, particularly in services. In a Reuters poll published Monday, 22 of 29 economists predicted no change in the January decision.