SAR/INR Outlook:
The SAR/INR exchange rate is slightly positive but likely to move sideways, as it is just above its recent average and has not shown a strong driver for upward movement.
Key drivers:
• Rate gap: The Saudi Arabian Monetary Authority maintains a fixed rate against the US dollar, keeping the SAR stable compared to the more flexible INR, which may be influenced by external factors.
• Risk/commodities: The oil market remains stable, which supports the SAR due to its connection to the energy sector. Any significant shifts in oil prices might affect the SAR's value.
• One macro factor: The US-India trade agreement has bolstered the INR through increased exports, though geopolitical tensions continue to apply pressure.
Range:
The SAR/INR is expected to drift within its recent 3-month range.
What could change it:
• Upside risk: A substantial increase in oil prices could strengthen the SAR further.
• Downside risk: Continued geopolitical tensions could exacerbate INR depreciation, putting pressure on the SAR/INR rate.
