The Indian Rupee (INR) has faced significant challenges recently, reaching a record low of 88.36 against the U.S. dollar due to concerns regarding new U.S. tariffs on Indian goods and persistent foreign portfolio outflows, which have exceeded $16 billion this year. Analysts from a recent Reuters poll suggest the INR is expected to stabilize in the near term, with forecasts indicating a slight improvement to around 88.04 by the end of September and near 88.00 within the next year.
On the Euro (EUR) side, recent developments have shown a strengthening of the euro, particularly following the European Central Bank’s decision to maintain interest rates. The ECB has revised its growth forecasts positively, suggesting a more balanced risk outlook for the Eurozone economy. Additionally, Bulgaria's upcoming entry into the eurozone highlights increasing confidence in the currency's stability. However, ECB officials are expressing concerns over the euro's rapid appreciation, which could impact export competitiveness.
The exchange rate for the INR to EUR has recently traded at 90-day lows, around 0.009652, which is about 2.2% below its three-month average of 0.009871. This decline has occurred within a relatively stable range, not exceeding 4.4%, indicating that the INR is facing pressure against the euro and reflecting broader economic difficulties influenced by both domestic and international factors.
Meanwhile, oil prices, currently at 66.99 USD per barrel, are 2.9% below the three-month average of 68.98. The volatility in oil prices, with a range between 65.50 and 78.85, could also influence the euro due to the Eurozone's reliance on energy imports. As geopolitical tensions, including the situation in Ukraine, continue to impact energy markets, fluctuations in oil prices may have an indirect yet significant effect on the EUR's performance.
Overall, while the INR is temporarily under pressure from tariff impacts and foreign capital outflows, the euro’s recent position suggests a foundation for stability, supported by solid monetary policy from the ECB and its implications in global markets. Moving forward, traders and businesses should consider these dynamics when planning international transactions.
