INR/THB Outlook:
The INR/THB pair is likely to decrease as it is currently trading below its recent average and near recent lows. The exchange rate is under pressure due to one notable driver.
Key drivers:
• Rate gap: The Reserve Bank of India’s flexible exchange rate policy contrasts with the Bank of Thailand’s tightened currency controls, leaving the INR vulnerable.
• Risk/commodities: The rising oil prices are impacting India's trade balance, leading to increased demand for USD and exerting downward pressure on the INR.
• Macro factor: Geopolitical tensions between India and Pakistan have created instability, which negatively affects INR’s performance.
Range:
The INR/THB is expected to drift towards the lower end of its recent range.
What could change it:
• Upside risk: A significant easing of geopolitical tensions could strengthen the INR.
• Downside risk: Continued volatility in oil prices may further weaken the INR against the THB.