SAR/INR Outlook: The exchange rate is slightly positive, likely to move sideways, as it remains above its recent average and within the current trading range.
Key drivers:
- The Saudi central bank's stable Riyal peg to the US dollar provides a strong floor, while India's weaker economic outlook is dampening the Rupee's performance.
- Oil prices are holding near recent averages, which supports the Riyal, as Saudi Arabia's economy is closely tied to oil revenue.
- The widening current account deficit in India and outflows from foreign portfolio investments are pressuring the INR, impacting its strength against the SAR.
Range: Movement is expected to drift within the stable recent range of approximately 4%, with no signs of breaking out in either direction.
What could change it:
- A significant improvement in US-India trade relations could strengthen the INR against the SAR.
- Further deterioration of the Indian economy, or more substantial FPI outflows, might weaken the INR further.