SAR/INR Outlook: The SAR/INR exchange rate is slightly positive but likely to move sideways, as it remains above the recent average but lacks a clear driving factor.
Key drivers:
• Rate gap: The Saudi Arabian Monetary Authority's stability supports the SAR, while the Reserve Bank of India's interventions aim to prevent a decline in the INR amid economic pressures.
• Risk/commodities: Current oil prices are above average, typically providing support for the SAR, given Saudi Arabia's significant oil exports.
• One macro factor: The ongoing trade deficit in India is pressuring the INR, affected by recent U.S. tariffs that harm Indian exports.
Range: Expect the SAR/INR to hold steady within its recent range, without significant upward or downward shifts anticipated.
What could change it:
• Upside risk: Positive developments in U.S.-India trade talks could strengthen the INR.
• Downside risk: Continued capital outflows from India may further weaken the INR against the SAR.
