INR/THB Outlook:
The INR/THB rate is currently below its recent average and near recent lows, suggesting a bearish outlook. The ongoing trade deficit in India and geopolitical tensions are key factors putting pressure on the Indian Rupee.
Key drivers:
• Rate gap: The Reserve Bank of India's recent flexible exchange rate policy contrasts with the Thai central bank's measures to control the strengthening baht.
• Risk/commodities: Rising oil prices may create further inflation in India, leading to a weaker INR as import costs increase.
• One macro factor: India's persistent trade deficit, driven by capital outflows, continues to weigh on the INR.
Range:
Expect the INR/THB to drift within its recent 3-month range as geopolitical factors and economic conditions influence price movements.
What could change it:
• Upside risk: A significant reduction in geopolitical tensions could support the INR's recovery.
• Downside risk: Continued capital outflows and rising inflation in India could further weaken the INR.
