INR/SGD Outlook: Slightly weaker, but likely to move sideways, as the rate is below its recent average and mid-range without a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of India's aggressive liquidity measures contrast with the Monetary Authority of Singapore's stable policy approach, affecting currency flows.
• Risk/commodities: Recent decreases in oil prices have increased demand for the Singapore dollar, as the city-state is less dependent on oil exports compared to India.
• One macro factor: India’s growing current account deficit due to high gold imports and limited exports is putting pressure on the Indian Rupee.
Range: INR/SGD may drift within its recent range as the market seeks direction.
What could change it:
• Upside risk: Any improvement in US-India trade relations could stabilize or increase demand for the INR.
• Downside risk: Further foreign portfolio investment outflows could weaken the INR against the SGD.