Looking Ahead: AUD to INR Forecast

Overview

Australia took an approach to its exchange rate policy that set it apart from developed economies. After adopting a floating exchange rate, Australia gradually shifted towards a more flexible system. The significant turning point came in 1983, when the Australian dollar started to float and capital controls were lifted. Alongside this change, there were financial market reforms that helped boost the internationalization of the dollar over the past 25 years. This flexible exchange rate played a role in safeguarding the economy against shocks, especially sudden and drastic shifts in trade terms. Australia managed to absorb these shocks without succumbing to inflation or deflation pressures that had been common under fixed or managed exchange rate regimes. As a result, this contributed greatly to the stability and resilience of the economy.

Economic Factors Influencing the AUD to INR Exchange Rate

For the next couple of years, tighter monetary policies would continue to support the growth of the global economy. Australia’s major trading partners in China recovered from the COVID-19 pandemic more slowly than initially expected. At home, economic activity was projected to remain weak for the rest of the year owing to cost of living pressures and higher interest rates. As these challenges ease and the people have higher incomes, things are expected to get better gradually. In terms of employment, which has been very competitive, it is expected that job markets will slacken in the coming years. It could also be due to growth that the level of unemployment and underemployment rises higher. Inflation or rise in prices is expected to decrease to around 3 1⁄4 percent in the latter part of 2024 and finally achieve the goal of 2–3 percent by 2025. Price cuts would mainly affect goods. Electricity would be more expensive and service prices will remain high. Worth noting, however, are uncertainties within the country that could impact these forecasts.

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AUD to INR Forecast: Impact of Global Market on AUD

Strong global economic headwinds will continue to knock the Australian dollar off course at the end of 2024. High interest rates in the US keep on firming the greenback, siphoning investors from riskier currencies like the AUD. Slowing recovery in China reduces demand for exports, including iron ore, which weakens the AUD. Moreover, geopolitical tensions in Ukraine and the Middle East add to risk aversion and drive investors toward safer assets. Since India opened its markets, the resilience of its economy has kept the INR stable, and currently, the AUD-INR hovers around 54-56 levels. Going into 2025, global interest rate settings, China’s appetite, and commodity prices also remain key drivers for performance in the AUD.

Also read: USD to INR Forecast

Expected AUD to INR exchange rates for the coming 4 months:

According to recent forecasts, the expected AUD to INR exchange rates for the rest of the months are:

• January 2025: The opening price was 53.06, a high of 54.19, low of 51.39; the average rate for this month is expected at about 52.70 and to close the month at 52.17 to reflect a possible drop of 1.7%.

• February 2025: From 52.17, High 52.71, and Low 51.15, the average rate will be about 51.99, and the month will end with 51.93, which represents a slight drop of 0.5%.

• March 2025: Opening at 51.93, reached a high of 51.93, and a low of 49.61. Then it averaged out the month, closing at 50.37 at 50.96, which represents a possible 3.0% decrease.

• April 2025: After touching 50.37, it may go to 52.17 and come back to 50.37. The average for the month can be around 51.08, closing the month at 51.40, which presents a 2.0% potential increase.

The forecasts seem to indicate a general downward trajectory in the AUD to INR exchange rate for the forthcoming months; at the maximum, some reversal could be witnessed around April 2025.

Here are some of the factors that could affect the exchange rate between the AUD and INR:

• Relative economic growth: In this case, if Australia’s economic performance exceeds that of India, then most probably the AUD will appreciate against the INR.
  
• Interest rates: Raising rates within an environment of a weak Australian economy leads to an increase in the demand for the local currency within an international context as investors consider its stability and value.
  
• Inflation: The depreciation of AUD relative to IRN in Australia results from higher inflation in Australia compared to that in India.
  
• Commodity prices: Increases in the prices of commodities such as iron ore and coal lead to increases in the AUD.
  
• Political risk: Investors’ uncertainty may affect Indian politics, making it hard for investors to commit their resources. This will force the INR to weaken against the AUD.

Also read: How to transfer money from Australia to India

Political Factors Affecting The AUD

Through December 2024, political stability in Australia under the Labor government led by Albanese had remained a plus for the AUD, while key policies such as infrastructure investments and tax reforms were put in place to accelerate economic growth. Improved trade relations with China, including the easing of tariffs and the resumption of exports like coal and beef, have strengthened Australia’s export-driven economy and positively influenced the AUD. There are, however, risks in global economic uncertainties, particularly the slowdown of the Chinese economy and the shift in US trade policy. Domestically, the monetary policy decision-to keep rates steady at 4.35% in support of growth but cautiously-reflects the inflationary pressures. These put together have been indicative of Australia’s resilient political and economic environment, which remains central to the AUD’s performance in global markets.

Economic Conditions In Australia

• National Debt: The national government debt stood at approximately $650.9 billion USD in June 2023, compared with $673.5 billion USD in the previous year.
  
• Unemployment Rate: The unemployment rate of November 2024 reflects a decrease from 4.1% in October to 3.9%, revealing a labor market that strengthens.
  
• Inflation: Underlying inflation was projected to return to the target range of 2-3% in mid-to-late 2025 as inflationary pressures would ease when demand and supply in the economy begin to balance.

Significance of Monetary Policy & Interest Rates on AUD

The Reserve Bank of Australia has left the cash rate, for the time being, unchanged at 4.35% following increases at the start of this year with an intention to stem inflation. The implication of such monetary policy move is massive on AUD. A case happened once when, due to speculations related to a possible political effect on the decision-making on interest rates by RBA, AUD once fell but soon rallied after the same. Besides this, AUD reached a 13-month low, influenced by such factors as weak GDP figures and a dovish shift by the RBA, which hinted at a possible rate cut in February. These events show how the monetary policy set by the RBA is essential to the strength and volatility of the AUD in reaction to economic conditions and market perceptions.

Forecast of AUD to INR

The Australian Dollar has remained turbulent against the Indian Rupee, trading at approximately 54.13 INR. During the entire year, AUD exhibited year-long fluctuations in the global economic uncertainties, domestic monetary policies, and a change in commodity prices, majorly influenced by the trade relations with China since it was Australia’s biggest trading partner. Decisions by the Reserve Bank of Australia to keep the cash rate steady at 4.35% were quite instrumental in sustaining the value of the AUD, though concerns about slowing growth and demand globally had negative impacts on the AUD. In the future, the AUD-INR exchange rate will be vulnerable to global economic prospects, trends in commodities, and interest rate expectations of Australia and India-a factor that makes it crucial for investors and traders alike to pay close attention to the ever-changing dynamics.

Also read: Sending Living expenses and Gift money to Australia from India

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Summary

A number of dynamic factors act upon the Australian Dollar. The cash rate has been kept by the Reserve Bank of Australia at 4.35%, balancing the scale between economic growth and inflation control. Inflation, on a year-to-the-September-quarter basis, was 2.8%, in the target range of the RBA at 2–3%. Also, global economic uncertainties and threats of recession in many developed economies may reduce demand for Australian exports, especially those commodities which the mining and agriculture sectors heavily export. The mining industry has remained strong, while agricultural production is still hindered by commodity price volatility and climate change. There are around 806,000 Indians living in Australia. Services like moneyHOP offer better international money transactions, offering competitive rates charged with a minimum, thus giving financial interrelations a boost, particularly between these two jurisdictions.