SGD/INR Outlook:
Slightly positive but likely to move sideways, as the rate is above its recent average but lacks a clear driver.
Key drivers:
• Rate gap: The Monetary Authority of Singapore's recent accommodative stance contrasts with pressures from India's trade deficit and capital outflows, putting the INR at a disadvantage.
• Risk/commodities: Oil prices remain volatile, which continues to negatively impact the INR due to India's heavy reliance on crude oil imports.
• One macro factor: The U.S. tariffs on Indian exports have further pressured the INR, contributing to its downward trend amid a challenging trade balance.
Range:
The SGD/INR is expected to hold steady within its recent range, with limited chances of testing extremes.
What could change it:
• Upside risk: A robust economic report from Singapore may strengthen the SGD against the INR.
• Downside risk: Further deterioration in India’s trade situation could lead to increased INR weakness.
