SAR/INR Outlook:
Slightly positive, but likely to move sideways as the rate is just above its 90-day average and within a stable range.
Key drivers:
- Rate gap: The Saudi Arabian central bank’s fixed peg to the US dollar supports the SAR, while the Reserve Bank of India's flexible interventions aim to manage fluctuations in the INR.
- Risk/commodities: Oil prices are currently above average, which benefits the SAR due to Saudi Arabia's oil-dependent economy, but it also adds pressure to the INR due to India’s reliance on oil imports.
- Macro factor: India’s persistent current account deficit driven by a widening trade gap continues to weigh on the INR.
Range:
Movement in the SAR/INR is expected to hold within the recent trading range.
What could change it:
- Upside risk: A significant increase in global oil prices could strengthen the SAR further.
- Downside risk: Any adverse geopolitical developments affecting investor confidence could increase pressure on the INR.