SGD INR stuck in a range?

Its been a few months since I wrote about the pair as most of the discussions were in comments to previous posts, but today’s MAS decision warranted a new post.

There were ripe speculations that MAS is going to ease the monetary policy (which it did) and Singapore is headed for a technical recession. The economy expanded by a modest 0.1% much against the consensus of a contraction of 0.1%. The immediate impact on the exchange rate was a modest gain from 1.4025 overnight to 1.3960 as I write.

One would question that why has SGD strengthened even though the policy has been slightly eased? There are various factors at play:

  1. The expectations of a USD rate increase this year are negligible. I would be surprised if the Fed raised the rates in Dec when the volumes are thin due to holiday season. My personal view is that it was a missed opportunity in Sep and Fed should have increased the rates but that’s a different topic of discussion.
  2. SGD had fallen all the way to 1.43 in anticipation of easing, but recovered slowly over the past week with rest of the regional currencies. If one looks at the bigger picture then Indonesian Rupiah has appreciated by around 9% against the USD and Malaysian Ringgit has firmed up by around 6% in past 10 days. The key words for me from the MAS policy statement is “slow the pace of local dollar’s gain”

MAS will continue with the policy of a modest and gradual appreciation of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) policy band. However, the rate of appreciation will be reduced slightly. There will be no change to the width of the policy band and the level at which it is centered, saying it would seek to slow the pace of the local dollar’s gains versus its trading partners.

Both Malaysia and Indonesia are key trading partners for Singapore and a greater than 5% jump in their currencies diluted any chance of SGD depreciation. The intent of MAS Is clear – it wants SGD to be slightly stronger than its trading partners.

Now if one looks at INR it appreciated very quickly in after the US job reports from the comfort that no fed hike is on the cards. It was good news for FII’s who can pump money in Indian Bonds and earn good interest rate. Many mistake this as FII investment in India because if one looks at the economic indicators they don’t look very good – be it industrial production. agriculture produce or job growth.

I have said this many times and would repeat again – the sooner INR falls towards 70 the better it is for India. The Indian exports are declining due to competition from other countries with weaker currencies and the day fed hikes the interest rate INR could dip 2-3% overnight and that is not a pleasant shock for the economy.

Anyway for now no major events are scheduled in the coming months other that the results of the BIHAR elections. I believe irrespective of the outcome the Rupee is scheduled to fall post-election results. If BJP wins there would be a knee jerk appreciation which will fizzle out as the economic data and realities will take center stage. If BJP looses then Rupee would immediately fall from a sentiment perspective.

So for the next few weeks I expect SGD INR to be range bound between 46-48.

Advertisements

101 thoughts on “SGD INR stuck in a range?”

    1. Hi Rahul,

      I think the Rates are pretty good now. Every month you wait results in around 30paise in interest loss (if invested in FD), So in 3 months it amounts to a rupee. You could wait for the budget session of parliament to end, there is a chance of Rupee touching 49 again by the time session ends

      Like

  1. Thanks for your insight Aditya..!! Probably you are right, no point in being too optimistic about INR. Wonder where would the rupee be if crude was at 100 usd.😳😳

    Like

  2. May I know what makes you think that MAS is not going to ease considering that SGD is pretty strong in comparison to its trading currencies such as yuan and ringgit? Singapore exports have been falling like Indian exports and considering that Singapore is more exposed to China than India. India substantially benefits from low crude prices, there is still a possibility that Indian government would make provisons for CAD in the current budget by asset sales etc. sorry for this long mail. I have a horizon of 6-7 months, so I can wait to repatriate.

    Like

    1. I said there would not be substantial easing. MAS wants a slightly stronger SGD than its trading partners and Ringgit and Rupiah have both more or less stabilized. CHINA realises that a weak Yuan is resulting in capital flight and might implement bands like Singapore instead of a daily fix. As for Indian budget there are talks of Food Subsidies and there is only that much one can fund by selling assets. Even if govt wants to sell assets the global market conditions are not favorable. The key is if INR is adequately valued or overvalued – I think it’s overvalued by another 5%. Having said that there might be days when SGD INR drops to around 46 for a short period in next few months time due to market volatility and that could be your opportunity

      Like

  3. Hi Aditya,
    The Singapore economy doesn’t seem to be in great shape either. Are we expecting any significant easing in the April policy review which would relatively improve INR in relation to SGD. I have to repatriate funds from India.

    Like

    1. I don’t think MAS is going to make substantial policy changes. You should have repatriated a few weeks back when INR was overvalued. 47 might become a base unless Indian govt can push through reforms in a big way

      Like

  4. Against USD, INR has fallen, but not against other currencies. You also have take into account the yield differentials. SGDINR is at 48 from 2 years now. GBPINR was 110 2 yeara ago and now it is 98. Take into account the interest rate differentials and you will be in the money.

    Like

  5. Yes, as I replied in your latest post, I am surprised that INR didn’t appreciate back like other currencies. RBI is probably buying dollars to keep exports competitive, because even though against USD, INR has depreciated a lot, against other currencies, INR is very strong.

    So fundamentally INR should appreciate, given the CAD but RBI is preventing it to make exports competitive, just like Japan and China are doing.

    Like

    1. INR will not appreciate as much because its grossly overvalued, irrespective of CAD the budget deficit is going to increase to 3.9% instead of 3.6% and gst bills and other reforms will not get passed. Sentiment can only keep the currency strong for that long. I think RBI is smoothening the fall and curtailing volatility. INR has steadily dropped from 63 to 68 in 6 months… I wonder what do all those research analysts from various institutions that were recommending a carry trade of buying Rupee say now? Most should be out of money

      Like

  6. Dear Aditya,

    The rate for transfer now is around 47.26. Could you please advise if its a good time to transfer some larger amounts of SGD.

    Thanks,
    Best Regards,
    Amay

    Like

  7. Hi Aditya, SGD/INR is in the upward trend. DBS is offering exchange rate of 47.1.. Do we expect the trend to continue or is it advisable to transfer?

    Thanks,
    Sumanth

    Like

  8. Hi Aditya
    I intend to transfer 50K to india for NRE FD. Do you think I should wait for more weakness in rupee or start converting. What are your views on FCNR, NRE FD or SG REIT ?

    Like

    1. Hi Piyush,
      Of the 3 instruments a NRE FD is still the best bet and virtually risk free. I am expecting the Rupee to slide against USD to 69 over next 2 weeks and that should bring SGD INR closer to 48. However given how currency markets can be and given RBI’s resolve to smooth out any slide the 48 mark might take longer than 2 weeks to achieve. I would suggest converting money to INR everytime you find a rate over 47 in chunks of 10k unless you have access to inter bank rates that are usually given for larger amounts.

      Like

    2. Thanks Aditya. Will transfer in chunks.
      Today’s article RBI mentioned they will defend Indian rupee. Do you think 48 remains to be an elusive level for now.

      Like

    3. I read that article as well… For me the key is the last line, “…. The RBI will intervene in the market to control the pace of depreciation”, RBI is comfortable with a lower Rupee specially with weaker oil prices they just don’t want to shock the system with a sudden steep decline.

      Like

  9. Hi Aditya, what is the forecast for SGD/INR for next one month. I need to transfer 30K sgd in next two months. Appreciate your thoughts.
    Thanks,
    Sumanth

    Like

    1. Hi Sumanth,

      I would recommend transferring at a net rate of 47 and above which should be achievable in next 2 weeks. 46 is a base figure for SGD INR, even though the pair is not directly traded 46 does provide strong support. Given that gst bill is unlikely to be passed any time soon and pace of reforms slowing down India cannot escape the global melt down. RBI though is doing a great job of making the fall gradual instead of a knee Jerk reaction.
      Thanks.
      P. S. Remember to transfer in chunks unless you get a very good rate one of the days.

      Like

  10. With the way oil is falling, it is a natural hedge for the Indian rupee. So don’t expect INR to fall very sharply. SGD on the other hand is now very very vulnerable to sharp depreciation. As yuan is falling and Singapore is like little China and will feel the heat more than any other country.

    Like

    1. Rupee has also started falling despite of lowering oil prices. As I have said earlier Rupee will fall very gradually unlike SGD which is more volatile. Let’s not forget that rupee is grossly overvalued and should be fairly valued at 70+ to the usd

      Like

  11. Hello Aditya,
    I want to transfer 35k $. is it a good time or do we foresee sgd going close to 48 in this month? Could you please advise

    Like

    1. Yes. Sgd would be close to 48 in a months time. However your transfer rate might be slightly lower. So if any of the days you get 47 or above nett rate try and send part of money

      Like

  12. Thanks Aditya for your prompt reply. Do you have suggestions for a reasonable bank or portal to repatriate monies from India to Singapore? I’m considering between axis, Icici banks or Sbi?

    Akieth

    Like

    1. I am not sure about the best services from India. Do remember to complete the formalities if it’s a capital account repatriation. If it’s from NRE account then no issues

      Like

  13. Hi Aditya, do you see anymore fall for sgd in the next 30 days? What would be a good level in the short term to repatriate money back to Singapore ?

    Like

    1. Hi Akieth,
      46 should be the floor for SGD INR. Intra day it might dip below 46 but 46 level should hold from a closing rate perspective.

      Like

  14. Hi Aditya, do you see any further fall for sgd in relation to INR in the next 30 days? If yes what do you see as the floor. I need to repatriate money from India to Singapore in next 30 days.

    Like

  15. Hi Aditya,

    The SGD is falling rapidly. Do you see rupee getting stronger given weak Yuan. In that case the exchange rate SGD to INR would still go down.

    Could you please advise.

    Thanks,

    Best Regards,
    Amay

    Like

  16. Hi Aditya,

    The SGD looks has been dropping continuously. Today it is 46.30. I have around 30k to transfer. Do you have any suggestions on whether i should wait for the transfer.

    Like

    1. Hi Joe,

      I am waiting for rupee to play catch up and drop as well… You could wait for a few days and remember to keep the sgd invested here. You can easily earn 2% or more by keeping the money in dbs multiplier or UOB one account.

      Like

  17. Hi Aditya,

    I wanted your advice on ‘Transferwise’ which is being used by many to transfer funds to India, since they give an actual rate
    . They currently do not offer transfer from SGD to INR, but they consider it if there are more number of customers at one point in time, so they get the benefit of volume.

    Could you please share your thoughts on :

    1. If it is advisable to transfer through them
    2. If we can in some way gather together to build a case to Transferwise for adding SGD to their bucket of currencies.

    Thanks once again for your valuable advice.

    Best Regards,
    Amay

    Like

    1. Hi Amay,

      I had not heard of Transferwise and went and looked them up. The whole thing about there actual rate is a marketing gimmick or maybe relevant in Euporean market where the banks take a large cut. Given that they dont have a SGD to INR rate I took USD to INR as a proxy. The key difference between Transferwise and say a Money2India or DBS remit is that Transfer wise charges a transfer fee which increases with the volume of money sent – 8.92 usd for 1000usd and 89.20 for 10,000 which translates to a .89% cut from the interbank rate. Money2India or DBS remit built this fee into the exchange rate as well which changes every hour or so. The fee is appx. .7 – 1% built in exchange rate so if interbank rate is 66.40 they offer 65.73 without any other fee.

      Applying there fee rate to SGD INR and comparing it to other players at the current spot rate of 46.99 (Bloomberg Rate)
      Transferwise – 46.99 * 1000 – 8.99 (fee) = 46570 (Effective Rate – 46.57)

      Money2india – 46.46
      DBS Remit – 46.59
      Axis – 46.70

      With the cut that the service provider takes being more or less the same I see no benefit that Transferwise gives over other players in the market.

      Hope this helps.

      Like

  18. Hi Aditya,
    In spite of the announcement from the Fed about interest rate hike, the INR started appreciating (w.r.t both USD and SGD). Do you see SGD INR touching 48 in the coming weeks/months?

    Thanks,
    Sumanth

    Like

    1. Hi Sumanth,

      Appreciation against USD was not expected but short term appreciation against sgd was predicted in one of my other responses to the question. RBI might keep rupee below 67 till Dec end just to let year end pass. Fresh positions will be initiated in Jan which should see Rupee weakness. Gst and other bills are unlikely to be passed this winter session either and I don’t see why people would be excited about India if the reforms are just not happening.

      Like

  19. Hi Aditya,

    I was monitoring the SGD-INR rate and found that it is slowly going down. Do you see it to increase with the Fed int. increase still, or are there any further developments on that front. I am planning to transfer a bigger sum and hence was keen to know.

    Thanks for your advice.

    Best Regards,
    Amay

    Like

    1. Hi Amay,

      Not sure why my reply is not appearing here but what I had said was that with the rate increase there will be short term sgd INR weakness. From a transfer perspective any nett rate over 47.5 is a good one to transfer.

      Like

  20. Hi Aditya

    What is your view on SGD-INR rate in next 1 week-1 month. Planning to transfer 100k SGD in next 1-2 months.

    Thanks for your time and advice.

    Like

  21. Hi Aditya,

    Thanks a lot for your comments. I will try to postpone the loan. Since there is no annual fee etc…maybe I can borrow and wait til, 16/17 Dec.

    Thanks once again for your help and advice.

    Best regards,
    Amay

    Like

  22. Hi Aditya,

    I am getting a loan in Singapore with 0% interest for 6 months with 1.38% processing fee. Could you please advise if it is worthwhile to take and transfer the same and invest in India, maybe in NRE Fixed Deposits which yield somewhere around 7%.

    Also, the SGD to INR rate was around 47.5 (DBS) which has come down to 47.17 (DBS) now. Hence, wanted to know if it is a good deal.

    Thanks for your advise,

    Best Regards,
    Amay

    Like

    1. Hi Amay,

      With a 1.38% processing fee the effective cost of your loan is 2.75% per annum. You will be investing in NRE account yielding appx. 7% interest rate that gives you a 4.25% play per annum. Over a 6 month period at a differential of 4.25 % your investment in India will grow to around 48.17 after adjusting for interest that you pay here assuming transfer rate is 47.17. Depending on the amount you should factor in any annual fee or charges you need to pay to maintain the credit line vis a vis the gain you would have by borrowing here and investing in India. There is a high chance of both gst bill being passes and fed increasing the Interest rate. My view is that after rate increase the rupee would fall quite sharply irrespective of the GST bill passage. You could wait till 16/17 Dec before drawing on a loan to get a clearer picture. There is a chance you might get a rate over 48 by that time.

      Like

    1. Hello someone,

      I expect it to remain flat till 16 Dec when Fed interest rate decision comes out. What happens after that depends on the decision and passage of the GST bill.

      Like

    2. Sgd INR has moved up to 47.85 as I write. I think it’s a good rate to transfer 25% of your overall amount.

      DBS is offering 47.46 as of now. Might change during the day

      Like

  23. Aditya, what is your target for SGDINR for 2016? My guess is in it move into a higher range 48-52.

    http://www.bloomberg.com/news/articles/2015-11-26/morgan-stanley-sees-12-won-drop-as-euro-hammers-asian-exports

    http://www.bloomberg.com/news/articles/2015-11-23/bank-of-america-the-great-divorce-between-the-world-s-two-largest-economies-will-drive-currency-and-rates-markets-in-2016

    Read these 2 articles on bloomberg, CNY and EUR decline will take Asian currencies down with them. But since SGD will also fall along with INR, my guess is the SGDINR the impact will be limited. Unless Singapore economy suddenly starts growing. What do you think?

    Like

    1. I don’t think CNY will fall a lot, once they make into the IMF reserve currency basket there would be demand for CNY which will limit the downside. EUR could fall but a lot will depend on refugee crisis. I think that SGD INR could try and touch 50 but crossing it would be difficult unless the government is unable to get any bills passed. The gold imports have fallen dramatically which would give the current account deficit some respite. For Singapore Dollar the key would be how does MYR and IDR move as MAS would like a slightly stronger currency than the trade partners and I do see these currencies appreciating a little as they have fallen quite dramatically in 2015.

      Like

    1. Transferring now or later is entirely your decision Someone. I do expect sgd INR to touch 48, now will that be tomorrow or in 2 months depends on how external factors play out

      Like

  24. Hi Aditya,

    ***I see SGD is gradually appreciating, will this trend continue, is it advisable to wait or transfer now??
    I would be sending closely 40K SGD. As i need it for land registration before end of this month, DBS is giving 46.48.

    Can u please help me here.??

    ASG

    Like

    1. Hi ASG,
      It’s 10 more days to month end therefore I would recommend to transfer over 4-5 days to average out your rate. You could also call up the banks and see if they can offer you a better rate for big amount like yours.

      Like

  25. I think at 66 lots of negatives are priced into the rupee. 68 may also come if there is a rate increase by US. But then SGD also will take a hit. I have just put an order on money2india to tfr 11k SGD. I am keeping only contingency funds in Singapore now.

    Like

  26. True. But they lost money in one week, over a period of time we need to see.

    But what interested me is what must have been the though process to choose INR in the top long basket and SGD in the top short. Surely some analysis must have gone into it.

    Like

    1. They lost 50bps in a month and fund volatility is 7%!! If SGD, EUR has fallen and INR has gained and they still loose money then there is something seriously wrong with there strategy. There is enough evidence how sometimes such news is published as a front running to funds unwinding their positions.
      Last week was Diwali week in India, markets were closed and after the Bihar loss the government could not have allowed the rupee to fall specially when modi is in UK. The Industrial production came below expectations. The winter session might be a wash out again unless government tries to work with all parties. There are enough reports that are already talking a out rupee falling to 68. China will make to the IMF basket and countries will have to buy Yuan as a reserve currency. Admist all this why would rupee rise is beyond my comprehension

      Like

    1. Last paragraph is worth reading…the strategy has lost money.

      “The risk of the aggregate strategy has been increased from almost negligible levels, and the annualised volatility stands at around 7%. The strategy has lost 50bp this week and has struggled throughout the month”

      SocGen is not the biggest player in the forex market and if they are selling someone else is buying. I would personally not follow a fund strategy that looses money

      Like

    1. SGD has gradually strengthened and INR fallen against USD. As of now INR is 66.70 against the USD. The Fed rate decision is due in 2 weeks time and if government is unable to get the GST bill passed in this winter session rupee fall will accelerate.

      Liked by 1 person

    1. Hi Annonymous,

      With BJP loosing conclusively and US job report better than expected I see Rupee taking a hit tomorrow and should weaken to 48 by year end

      Like

    1. Rupee does not fall in after markets it’s a partially convertible currency unlike SGD. Wait for monday morning to see the Indian stock markets to fall and rupee to follow. Bihar election results are out next week as well and if BJP does not get majority or is not the party with maximum seats the rupee fall will accelerate. SGD would have already prices in US jobs data by tonight. Looking at technical charts if Rupee breaks 66.8 then 68 will be within reach.

      Like

  27. I read somewhere that FIIs have maxed out on govt debt and now chances of rupee appreciating are lower. If you guys have waited this far without transferring, I think its worth waiting some more rupee may start its downslide.

    Like

  28. I m working here and transferring salary only to NRE account. Will never bring back that money in Singapore. Just holding back transfer due to it stuck in 46 range so just asking will rates improve or it is better to tranfer right now.

    Like

    1. Today’s interbank rate is 46.90, a transfer service should offer 46.50 rate. You would earn appx. 30 paisa per month in interest in NRE account so even if the rate touches 48 in 2 months you would be more or less breaking even. Depending on your risk appetite you can transfer now and have peace of mind or wait for Bihar election results and probably gain around 50 paisa in 2 weeks time. Again no one knows what the result is going to be and you would be taking a chance.

      Like

    1. … That’s not enough information. It does not tell me where is it invested in Singapore, do you want to keep that money in India forever or bring it back to Singapore, does it go to a NRE account or a normal account. If it goes to a normal account then do you pay tax on it or not. Understand that you might not want to disclose all that on a public forum in comments but if your money earns no more than. 25% in Singapore and you wish to keep it in India with no intention of bringing it back then you can transfer anytime

      Like

    1. That depends on where your money is invested right now and what do you plan to do with money in India. What works for others might or might not work for you

      Like

  29. As long as oil prices are below $50 per barrel, INR should be strong and the impact of US rate hike should be same for both SGD and INR. I would be surprised if INR falls to 68-70 and SGD remains at 1.43. I would expect SGD also to fall to 1.46-1.48.

    Even during the knee jerk surprise by PBOC to depreciate CNY, the impact on SGDINR was max of 47. So I would be surprised if SGDINR crosses 48 anytime in the near future.

    Like

    1. INR moved from 66.50 to sub 65 when the news of fed not increasing rates came out around 6 weeks back, SGD did not appreciate much at that time so if fed really increased rates in Dec then INR would precipitate.

      Like

    2. Oil is below 40 for a few weeks and INR has still crossed 68 however SGD is below 1.4, finally fundamental are playing in

      Like

  30. Hi Aditya,

    Fed gives signal that may b rates will be hiked in next dec meeting.. i want to know how it will be reflected on sgd??? Thanks

    Like

    1. Hi,
      The bigger impact should be on INR. SGD is already around 1.40 to usd, it could fall all the way to 1.43 which is around 2% from here… INR on the other hand should precipitate to 68-70 if fed actually increases rate in Dec.

      Like

  31. Hi Aditya,

    SGD seems to be really stuck in a range of 46.xx. Do you see any chances of going above 47 in the near future.

    Thanks,
    Amay

    Like

  32. USD seems to be falling against a lot if currencies, but not against INR. Looking at the way AUD and EUR have appreciated, INR should have gone to 63. I think RBI is accumulating reserves and preventing INR from rising.

    Like

  33. It is a case of over reaction when SGD fell too much and now the correction. Maybe MAS is intervening as well.

    This just means now you have better opportunity to sell SGD. But the trade should always be sell SGD and buy INR. There is one gentleman who has accumulated 60k SGD. If he has been accumulating for last 6-8 months then he is in a loss. Regular transfer as soon as you get your salary or wait for max 1 month, is the best principle.

    Like

  34. Hi Aditya,
    Nice article and very well analysed.Thank you so much for giving detailed insight and its really useful.

    Thanks,
    Veera

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s