INR/SGD Outlook:
Bearish, as the rate is below its recent average and near recent lows.
Key drivers:
• Rate gap: The Reserve Bank of India’s flexible exchange rate policy contrasts with Singapore’s more accommodative monetary stance, influencing the INR negatively.
• Risk/commodities: Continued global demand concerns for oil have pressured the Indian Rupee, given India's heavy reliance on crude imports.
• One macro factor: India's persistent current account deficit, driven by a widening trade gap, continues to exert downward pressure on the INR.
Range:
Expect the INR/SGD to hold in a stable range, reflecting its recent movements within 7.7%.
What could change it:
• Upside risk: A rebound in foreign portfolio investments could bolster the INR's value.
• Downside risk: Further deterioration in manufacturing exports may intensify pressure on the rupee.