INR/SGD Outlook:
Bearish, as the INR is currently below its 90-day average and near recent lows, influenced by significant downward factors.
Key drivers:
• Rate gap: The Reserve Bank of India's monetary policy is less stringent compared to Singapore's monetary policy, contributing to INR weakness against the SGD.
• Risk/commodities: With crude oil prices remaining high, India's reliance on oil imports continues to put pressure on the INR, straining the current account.
• One macro factor: Increasing foreign portfolio investment outflows from India due to adverse global risk trends are adding further pressure on the rupee.
Range:
The INR/SGD is likely to drift within its recent stable range, as it sits below the average level and lacks strong upward momentum.
What could change it:
• Upside risk: A shift in global investor confidence could lead to a rebound in foreign investment in Indian markets, offering support for the INR.
• Downside risk: Continued geopolitical tensions or a further deterioration in export performance could exacerbate pressures on the INR, pushing it lower.
