Bias: Bullish-to-range-bound, given that the SAR/INR rate is above the 90-day average and in the upper half of the 3-month range.
Key drivers:
- The Saudi central bank's fixed exchange rate policy supports the riyal, maintaining stability against the dollar.
- Oil prices have remained strong, which benefits the SAR as Saudi Arabia's economy heavily relies on oil revenue, thus supporting its currency.
- India's trade deficit has widened recently, resulting in increased pressure on the rupee as the country struggles with export tariffs and foreign capital outflows.
Range: The SAR/INR is likely to hold steady at current levels but could drift slightly within its recent stable range.
What could change it:
- Upside risk includes improved trade negotiations between the U.S. and India, potentially boosting the INR.
- Downside risk could come from further foreign capital outflows, which would likely weaken the rupee against the riyal.