INR/THB Outlook: Slightly weaker, but likely to move sideways, as the rate is currently below its 90-day average and near recent lows without a strong directional driver.
Key drivers:
• Rate gap: The Reserve Bank of India has adopted strategies to stabilize the INR amid ongoing foreign investment outflows and an increasing trade deficit, while the Bank of Thailand has tightened its reserve requirement to limit speculative inflows.
• Risk/commodities: Oil prices are currently at 90-day highs, which can lead to increased inflation concerns in India, negatively impacting the INR as higher oil costs strain its current account.
• One macro factor: The widening trade deficit in India reflects continued challenges, especially due to US tariffs on its exports.
Range: The INR/THB rate is likely to drift within the recent 3-month range, as both currencies face pressures from their respective economic conditions.
What could change it:
• Upside risk: A significant shift towards improved US-India trade relations could bolster confidence in the INR.
• Downside risk: Continued depreciation driven by increased foreign outflows and persistent trade deficits could weaken the INR further.
