INR/SGD Outlook:
The INR to SGD rate is currently below its recent average and near recent lows. This suggests a bearish outlook, compounded by immediate pressures in the market.
Key drivers:
- Rate gap: The Reserve Bank of India's gradual depreciation policy contrasts with the Monetary Authority of Singapore's support for the SGD, contributing to the INR's weakness.
- Risk/commodities: Recent volatility in oil prices tends to negatively affect the INR, as India is a major oil importer; higher prices put further pressure on the currency.
- One macro factor: The ongoing trade deficit and capital outflows from India have diminished demand for the INR in international markets, adding to its depreciation.
Range:
The INR/SGD rate is likely to drift within its recent range, facing challenges to regain strength.
What could change it:
- Upside risk: A significant improvement in Indian exports, particularly to the US, could support the INR.
- Downside risk: Continued geopolitical tensions could lead to heightened risk aversion and lower demand for the INR.
