SGD INR crosses 50!!

Finally the SGD INR RATE crossed 50, it’s taken 3 years for the pair to return back to this level and there is more appreciation to come.

In Aug of 2013 the Rupee was battered to all time lows and the RBI had a new Governor in Raghuram Rajan in September. The fiscal situation looked bad then with oil at all time highs and political uncertainty in India. With some bold policy moves (NRE FD’s and FCNR scheme) and good luck (falling oil prices) the RBI was able to reign in the fall and stabilize the foreign reserves situation.

But with global uncertainty in form of referendum on Britain’s exit from EU, the trajectory of Fed fund rate increases and increasing oil prices exit of RBI governor could not have come at a worse time.

The FCNR deposits of 3 years back are due for redemption between Aug and Nov of this year which would be a 20 billion USD outflow of reserves. Gold and Oil prices have bounced back from all time lows which will add to India’s woes.

If Britain decides to exit the EU then the global uncertainty will increase and any foreign firm will reevaluate their overseas investment plans which will include India.

What is most surprising is that a RBI governor who has been dead correct in warning the other federal reserves that cheap money policy is not a cure to global financial woes and has been instrumental in stabilizing the Rupee and control inflation is being let go due to political reasons – just because he decided to disagree with the government and force them to make the right policy changes he is being penalized.

Anyway the damage has been done and I would not be surprised if Rupee hits the 75 mark against the USD by November this year and if that happens SGD INR will be at 55.

However in the short term a range of 49 to 52 would be seen. For today I expect intraday volatility where after the initial fall RBI will try to stabilize the Rupee though a gradual fall in coming weeks should be expected as the international event unfold.

….. And remember 52 is not far away.

Advertisements

446 thoughts on “SGD INR crosses 50!!”

  1. https://www.fxstreet.com/news/sgd-neer-near-top-of-the-range-anz-201707250717

    “The S$NEER has risen to 1% above the midpoint of the policy band, which has been a key resistance level in the past.”

    “We do not see SGD strength being sustained, as economic growth is not showing signs of a pick-up in momentum and inflation remains low. The advanced Q2 GDP print came in below expectations at 2.5%y/y, and June CPI data showed muted core inflation pressures. Hence, the current MAS neutral monetary policy stance is set to remain for some time. The Q2 labour market data out this Friday will likely show ongoing labour market slack.”

    Basically, this says SGD has gone up as much as it could. It doesnt have legs to go up any more. I was actually under the impression that SGD is undervalued and has been underperforming especially if you compare it with EUR, NZD, AUD and CAD. All have gone up against USD much more than SGD has gone up. But apparently, not. The trade weighted basket is such that USD fall is affecting the SGD fall much more than the rise in other currencies. So looks like SGD has peaked already.

    Like

  2. Hi Aditya,
    I realized, FSM is good for Unit trusts, SG & HK stocks. Unit trusts inherently are high management fee products and most of them underperform their benchmarks. The best way to have a diversified portfolio is via ETFs. SG and HK have only a few ETF listings. To access the full range of ETFs I would need a proper broker that deals with many markets mainly the US market. I also did research that Standard chartered is the best in terms of low minimum commission. I am going to most probably open a brokerage account with SCB and create a nice diversified portfolio there and may be do some short term trading too.

    I sold that Schroder commodities fund after I interacted with another forum members and they told me about high management fees of Unit trusts. I made 2% returns or $600 on an investment of 30K SGD, in a week. My 1st short term trade after a long long time. I guess I got lucky 🙂

    Cheers!

    Like

    1. The schroder commodities fund had a management fee of about 2% plus there is a platform fee of 0.4% per annum. Although there is no sales charge, for short term trading FSM unit trusts are good. Also if you have noticed in the press lately active managed funds have underpeformed benchmarks and have drawing flak. ETFs are the best way to invest and most ETFs are in the US market. So FSM with only SG&HK markets feels handicapped.

      I just went to Stanchart Tampines branch and opened online trading account and also bonus saver account with them as you need to open savings account with them in order to transfer money in. I will close my OCBC 360 account and make this SC bonus saver as my main salary and savings account. I considered opening BoC smart saver account, but I guess, I am not going to keep money in a savings account anymore in Singapore, I will probably invest it instead, so Bonus saver will do.

      Cheers!

      Like

  3. Hi Aditya,

    What are your thoughts about repatriating money back to Singapore, from NRE account? Have you ever tried it? I think at current rate of 47. It will probably cost about 47.5 to convert INR to SGD with the spread. I think this is still profitable considering most of my transfers were done in 2015 when SGDINR averaged around 46. I have a hunch that INR will depreciate from here, sharply may be to 50-52 levels. Also, would it be better to repatriate it to USD in a multicurrency account in Singapore? USD has been quite weak recently. I could then use USD as the funding currency in fundsupermart and then it would be another question of where to invest. I want to have a small portfolio of about 200K SGD in singapore, even after I relocate back to India for good, just because there are much better investment options through Singapore and it also provides geographical diversification, just in case, India turns into a Venezuela.

    Like

    1. Hi Nitin,

      I haven’t tried repatriating money from India to Singapore. From what I understand the cost of transfer including the exchange rate spread and cost of remittance is around 1.5%.
      Yes, it is possible that Rupee can depreciate sharply against Sgd. The sgd data has been better than expected and INR has fundamental issues.
      Depending on how your money is invested in India I think leaving it there might be a better bet looking at the cost of transfers. There should be atleast one rate cut in India which will help the bond funds. I find equity valuations completely out of sync with reality across the world (except few countries) so staying in cash is a good idea. I don’t like USD in the short run due to political uncertainty. SGD is a better bet. Using USD for fundsupermart also has costs because the exchange rates are not transparent. So if I were you I will stick with SGD.
      And yes, India is not gonna become Venezuela.
      Cheers

      Liked by 1 person

    2. Dear Adhithya,

      Please explain how RBI’s upcoming interest rate decision will impact on SGD to INR. Expect RBI likely hold existing interest rate. What’s your opinion on holding SGD for short term. Can we expect transfer rate 49+ in upcoming 3 months.

      Have a nice day!

      Regards
      Rajesh

      Like

    3. Hi Aditya, I have decided to go ahead and repatriate money from my NRE FDs to Singapore. But I will do it in USD. I have opened online trading account with Stanchart. I will then by global equity ETFs in USD, like IWDA. I have done lots of research last one month and I am convinced that maintaining a portfolio of global ETFs in Singapore is the best thing to do. I am going to do online repatriation from ICICI to Stanchart. I will let you guys know how it goes.

      Cheers!

      Like

    4. Hi Nitin,

      I am sure you would have done your homework but if I were you I will not put my money in USD and while investing in Etf just be careful as stock valuations across the globe are over stretched.
      There is a very realistic chance of armed conflict where China will use its pawns North Korea, Pakistan to create turmoil in the world and that would hurt not only the dollar but also global stocks.
      Some exposure to physical gold, EUR and GBP might not be bad idea.
      Good luck with your investments.

      Liked by 1 person

    5. Thanks Aditya, I just called ICICI, the commission on repatriation is 2%! Spot rate as of now is 64.14 and current rate for repatriation is 65.34. I think it is not worth it. So I give up my idea of repatriating from India.

      Like

    6. You see, that’s why I have always discouraged the taking funds to India on loan and trying to bring it back. The cost of transferring in and out makes the transaction not worth it.
      Given the market conditions I prefer staying in cash.

      Liked by 1 person

    7. BTW Aaditya and Nitin, are there any chances of INR moving towards 46 with regards to SGD. Or whats the range you guys are expecting till the end of year including chances of SGD strengthening after MAS review of policy in Oct? Many thanks!

      Like

    8. With uncertainty in the market it is absolutely possible for sgd inr to touch 46 for a short period of time. However a rate of 46 is a unrealistic exchange rate as INR has strengthened by a lot against USD. Ideally usd INR should move to 65 and which would keep 47 as strong support for sgd inr.

      Like

    9. Hi Aditya, would you recommen these india bonds considering 2-3 years horizon?
      1. ICICI Prudential Corporate Bond Fund (G)
      4* rating
      2. Reliance Corporate Bond Fund (G)

      or any other short term indian bond fund would you recommend with 2-3 years horizon at this point in time. Or money would be better in a fd.

      Thanks

      Like

    10. Hi Aditya,

      Any particular reason to avoid short term Indian bonds. My horizon is 2-3 years.
      BTW, how long should be the holding period for the bonds you have mentioned?

      Many thanks!
      Ankieth

      Like

    11. Hi Ankieth,

      I believe that RBI will have to make one more interest rate cut. The strong currency will dampen inflation. Also a interest rate cut makes the Indian bond yields less attractive and should discourage hot money from pouring into India.
      The only reason RBI is cautious is because of bad debts that banks have on their balance sheets.

      I am going to hold bond funds for atleast 12 months or till the next interest rate cut happens.

      If you remember, in February I had favored long term funds instead of short and ultra short.

      Cheers

      Btw, Reliance’s fund management arm is deploying the same strategy as above

      Like

    1. Hi Naveen,

      If I were you I will transfer half now and wait for a month (RBI’s rate decision in Aug) for remaining half.
      If you transfer today and invest in tax free NRE deposit @ 6.5% you would earn interest equivalent of exchange rate of 48 in appx. 3.5 months time.

      Cheers

      Like

    2. Hi Naveen,

      It’s not that attractive and what I don’t like about the site is that the way information is laid out it makes customer believe that they are receiving the market rate whereas there is a 0.5% fee. DBS charges 0.8% and as of today Hdfc is only charging 0.6%. I personally would not trust an unknown name with large amount of money.

      Like

    3. Hi Aditya,

      I have some funds to invest in Singapore. I have a low to moderate risk profile with horizon of 2-3 years. Would you recommend any of these funds:
      Jp morgan global income sgd hedged dividend
      United Income Focus Trust – class Sgd
      Global Multi Asset Income fund
      Franklin Templeton Investments
      First State Dividend Advantage

      Or any other fund you would recommend with 2-3 yrs horizon? I remember you mentioning about malayasia linked fund in one of your earlier posts?

      2. Or something like FCNR deposits (in any currency where you see good returns in 2-3 years)

      Thanks,

      Ankieth

      Like

    4. Hi Aditya,

      I have some funds to invest in Singapore. I have a low to moderate risk profile with horizon of 2-3 years.

      1. Would you recommend any of these funds:
      Jp morgan global income sgd hedged dividend
      United Income Focus Trust – class Sgd
      Global Multi Asset Income fund
      Franklin Templeton Investments
      First State Dividend Advantage

      Or any other fund you would recommend with 2-3 yrs horizon? I remember you mentioning about malayasia linked fund in one of your earlier posts?

      2. Or something like FCNR deposits (in any currency where you see good returns in 2-3 years)

      3. Are the assest classes such as equities and bonds too escalated and risky currently to invest due to the liquidity driven rally? In that case would fixed deposit in singapore would be the best option?

      Your input and advice would be much appreciated.

      Thanks,

      Ankieth

      Like

    5. I have just put 30K in Schroder AS commodity fund. I am betting that commodities have bottomed out and they will rise from here. This is my personal judgement and I have been wrong many times before, so do your own due diligence. Cheers!

      Like

    6. Hi Ankieth,

      I haven’t reviewed any of these funds and difficult to say how good or bad they are.
      From a macro view I prefer investing money in Bond Funds in India. A interest rate cut will happen in India no matter what. RBI governor is in a way correct to hold back because NPA situation is bad and if they cut a rare now the lenders will want to restructure loans instead of settling them but given political pressures I think a rate cut is a near certainity in August.
      Across the world the central banks are raising rates so bonds will fall and I will stay away from bond funds in any other country.
      Equity markets are showing stretched valuations and the way people are so exuberant about any and every stock points to an upcoming crash.
      For example amazon trades at price to Book value of over 20 which is absolutely absurd.
      I do like Malaysia because after 18 months post gst and a weak ringgit they are very well poised to bounce independent of what happens in market. The political drama seems to have ebbed out.
      I am personally inclined to invest in short term international bond funds, long term Indian bonds or funds, Malaysian, Vietnamese and Philippines Equities and keep a potion in cash so that when markets correct you have the opportunity to jump in.
      Again these are my views and each one’s risk and investment profile is different so make your decisions accordingly.
      Cheers

      Oh btw, if you are looking at a 10 year time frame I would recommend buying Govt issued Indian Gold coins. These I believe will become extremely sought after in the coming years and give good return.

      Like

    7. Dear Aditya;

      Request you to advice how to invest in Indian gold coin for 10 years being in Singapore.

      Regards Rajesh

      Like

    8. Hi Rajesh,

      I can put you in touch with someone who can arrange for these in Singapore. But please be aware that these coins are sold at a substantial premium over spot and are liable for gst in Singapore. You can check the prices in India at govt of India website http://indiangoldcoin.com/en/index-2/ and the coin will also attract 3% gst in India. Don’t buy this as an investment in gold but as a alternative investment or collectible for the long run.

      Like

    9. Thanks Aditya for quick reply. Please connect me with someone who can help me to invest in gold coin in india for 10 years plan.

      Rajesh

      Like

    10. Thanks Aditya can you suggest some funds and bonds under the categories you mentioned. I haven’t had the experience of investing in the 3 categories you mentioned. My investment horizon is 2-3 years so Im not thinking beyond it currently.

      Nitin, I believe investing into commodities based fund is a contrarian call since all the related funds are down by 5 to 20%.

      I usually invest through Singapore banks who charge I one time entry fee of 2-2.5%. Is investing through fundsuperart advisable? If I understand correctly they charge an admin fees quaterly?

      Thanks for your advices.

      Ankieth

      Like

    11. Hi Ankieth

      I have used fundsupermart for 10 years now. They have zero front end or selling charges. The admin fee is 0.1% every quarter which is extremely low. Comparing to a 1 time 2% fee for banks it will be 5 years on fundsupermart to break even.
      Lion Capital Malaysia fund or short duration bond fund are good.
      Aberdeen funds are also good. Have a look and decide based on your preference.

      Like

    12. Thanks Nitin for sharing your investment idea. I will explore more on it and share if there is any interesting info.

      Like

    13. Hi Ankieth, Yes it is a contrarian call. Kind of catching the falling knife. Commodities have been falling for 5 years now. So I believe they are close to their bottom. There might be some more fall ahead, but over next couple of years they should rise. Today China’s economic data has been strong and USD is weak. This is good for commodities. Already oil has kind of refused to fall any more. So I hope it is good bet. Cheers!

      Like

  4. I have just accumulated about 40K of SGD now in the past 1 year without transferring to India. I guess, I cant hold on anymore. I will have to pull the trigger.

    Like

    1. You should have taken advantage of the dbs rate on monday. That was equivalent of having spot over 48.25

      Like

    2. I transferred big sum last Monday which I was accumulating for last three years at 47.66.
      Now next challenge is it to invest that in India.
      Any direction is highly appreciated.

      Thanks
      Deep

      Like

    3. I did the same thing thanks to your prompt Deep.
      I would suggest to leave it in a NRE savings account for sometime and wait for clear signals to emerge. I personally am staying away from stocks at such unrealistic valuations and bonds with unclear interest rate outlook are risky as well.
      GST and monsoon stats in July should set the tone for markets. I do expect index to correct by at least 10% and if monsoons are good the RBI would cut interest rates making both stocks and bonds attractive.
      On a different note, I like Malaysia with target of 25% gains over next 18 months. You can check out Aberdeen Malaysia fund

      Liked by 1 person

    4. Thanks Aditya, I will have a look. I am planning to start a small SIPs of 30k rs. monthly to HDFC Life Click2Invest ULIP which gives a tax free investment and tax free return. I feel this is the best ULIP product available in the market.

      Like

    1. Dear Adhithya

      Govt of India successfully implementing GST from 1st of July. Do we expect any major change on SGD=INR after GST?

      Like

    2. Hi Rajesh,

      Historically gst implementation has resulted in lower GDP in any country it was implemented and I expect similar impact in India. However I don’t see major movement in SGD INR in the short run. 47.50 should be the cap for now.
      Thanks

      Like

    1. Yes and its increased to 47.71. I was able to transfer the fund at this rate. However not yet received in NRE account.

      Like

    2. Great. Thanks for information Deep. I was able to book a transfer. Waiting for it to be credited.
      DBS decided to give us a GSS offer and beat the money changers at their game 🙂

      Like

    3. Yes Aditya it seems to be a limited but strange offer by DBS . Now rates back to 46.20. I started to receive credit into my NRI account.

      Like

  5. Hi aaditya , I wanted to convert SGD to INR but waiting for good rate probably around 49-50 . I can wait till December for good rates . When do you expect this rate ? or what will be the max rate you expect ? Also can you please let us know how GST will affect the rates .

    Like

    1. Hi Piyush,
      There is no guarantee that rates will move back to 49 or 50, however if you have invested the money in Singapore and earning 3.5% or more then you can hold and watch till the year end.
      GST historically has resulted in lower GDP in other countries and I see a similar impact in India. The govt is hoping for a rate cut to neutralize the effect but with high NPA the RBI is correct to hold its stand. Extra liquidity will only increase the likelihood of bad debts.
      I think 47.50 in 2 months is a realistic rate for sgd inr.
      Cheers

      Like

  6. Do you forsee the rise in exchange continue or there might be a dip.. anything you forsee for the near future would be helpful.

    Also please leave the add comments on the top as well if possible

    Like

    1. Yes, I do see SGD INR to continue rising till the political uncertainty (which is a bit of a joke) in US exists.

      And its not possible to move add comments to the top.

      Cheers

      Like

    1. I was expecting this move. Looking at the charts it seems 64 is the level RBI is defending against the USD and with the political turmoil in US, SGD should continue to strengthen against USD if not absolutely then atleast relatively to INR.
      Cheers

      Like

  7. Hello Aditya/ Nitin,

    Today I got call from Phillip Unit Trust, to invest in mutual fund. I am going to meet their financial advisor on this Saturday. Can you advise, is it safe to invest in Mutual funds. or can you suggest any safe mutual funds for Short term (1-3 Years).
    What are the specific points that I need to know about, before investing.?

    Thanks & Regards,
    Hitul

    Like

    1. Hi Hitul

      I personally use fundsupermart as they have a comprehensive list of funds and zero buying and selling charge. I am not sure what Philips unit trust charges.
      Mutual funds are subject to market risk and can loose money. If you are risk averse stick with bank fixed deposits. The simple rule in markets is higher the risk, higher the return.
      For me personally charges and fees are the most important things and platforms with zero fees are my preference. Rest depends on you risk profile. As a rule of thumb always have enough liquidity to cover fee months of your expenses and emergencies so that you dont have to liquidate your investments.
      Cheers.

      Like

  8. Hi Aditya,

    What is your view about paying off approx. 100k home loan in Singapore. Currently I am paying @1.44% and have offer to switch to a better package without charges. Though I don’t feel it’s worth to payoff but thinking would it be beneficial in longer term?

    Also I am looking for pension/ retirement plan in Singapore and India to start investing now at the age of 40. Any pointer / guidance is much appreciated.

    Thanks
    Deep

    Like

  9. Hi,
    Sorry for confusion…
    I’m working in Singapore since October 2014 and by August end 2017 finishing my job here so has to move India in first week of September 2017..,
    By that time I may hold 70ksgd…
    If rate around 47inr per sgd, I will transfer my total money to India by August end…
    If rate around 45inr per sgd, I’m thinking to hold in Singapore for some time…
    Is good decision to hold here in Singapore after moving me to India…
    Thanks both of you
    Phani

    Like

    1. Hi,
      There is absolutely nothing stopping you from holding money in Singapore – be it Indian law or Singaporean.
      Cheers

      Like

    2. Currencies cannot be predicted, who knows if by December SGDINR is closer to 40. The amount is too big to take a risk. If you are willing to take a risk that it is your choice, it could be 47 or 50 also.

      Like

    3. To me the distance from 45 to 50 is the same as 45 to 40. It could rise 10% or fall 10%. It is true that compared to the recent past 45 seems like a bottom, but history is history. There is a reason why it is at 45 today and it is not by accident. In 6 months, there will be a different reason why it will be at 40 or 50 or it may not move that much also. For me moves in both extremes will be equally surprising.

      Like

  10. Hi Aditya and nitin,
    Thanks for your suggestions…
    This financial year 2017 tax return will be processed by our company as per my annual income…
    But I’m holding some money since 2016… Is this money need to include in my 2017 tax returns?
    after filing 2017 returns, is it possible to keep my total money in my dbs account for some time…
    For example…. I will leave Singapore in first week of September 2017 thereafter can I hold my money in my dbs account till end of December 2017 or how many months I can hold here in Singapore without tax problems?
    Thanks& Regards,
    Phani

    Like

    1. Hi Phani

      Which countries return are you talking about? And how long have you been here in Singapore.
      You can hold money in Singapore indefinitely there is no Singapore or Indian law that prevent you from holding it.
      Cheers

      Like

    2. 1st week of Sep will be bad. How many years did you complete in Singapore? If you satisfy any of the 2 below conditions:
      1)If you are holding NRI status for 9 out of 10 previous years.
      or
      2)If you have spent less than 729 days in India in past 7 years.
      then you can file returns are RNOR and you can keep your money in Singapore for sometime without problems.

      1st week of Sep means, you complete only 5 months overseas and 7 months in India, so you if dont satisfy RNOR, you will be taxed at your Indian tax slab for your foreign income. I dont know how you will prove that the income was from 2016. To be an NRI for the current FY, you need to be in Singapore until end of September.

      Like

    3. Salary slip and Singapore tax return are more than enough proof for any year. It is not possible that company company does not give salary slip.

      Like

  11. Hi Aditya,
    By August end what will be the conversion rate of SGD to INR.
    because I have 70k sgd and my job finishing here in singapore by end of August.
    can we manage our DBS account from India, once we move to India completely?
    please suggest me…
    Thanks& Regards,
    Phani

    Like

    1. I would not put money in USD nor will I suggest opening a RFC account and definetely no accounts with ICICI Bank. They have the lousiest customer service and a shaky balance sheet. A person can enjoy the Resident but Not Ordinarily Resident status for upto 2 years. Even if a person is returning to India for good i prefer keeping the option open and hang onto the NRE account for as long as possible.

      Like

    2. Hi Phani

      Rates should stay between 46 to 47. In the long run Rupee should weaken as gst is implemented. Historically any country implementing gst has suffered for first 18 months.
      Yes you can manage your DBS account from India, it’s all online banking.
      Thanks.

      Like

    3. RNOR status is not meant that for 2 years you can keep your NRE account open and enjoy tax free interest. You need to convert your NRE account to Resident account as soon as you return to India for good. RNOR status means, your foreign income for those 2 years will not be taxable. Also RNOR has minimum requirements of stay abroad. If there was no RNOR, then the money you bring from abroad during the last year will be fully taxable if you are in India for more than 186 days.

      So it is important not to confuse RNOR with NRI. So person who is already decided to return to India, it doesnt make sense to put money into NRE FDs. You will probably get away with it, but it is illegal.

      How will you be caught? Lets say you take up a job in India and TDS will be cut, Tax dept could question you why didnt you rebrand your NRE account to resident or RFC account when you knew you are back for good.

      So tread with caution with Indian tax authorities.

      Like

    4. Also, if you decide to keep money overseas after your return to India, extra caution needs to used while filing taxes. You have to declare your foreign assets correctly every year. If you don’t and then suddenly after a long time you decide to bring the money to India, the whole thing could be taxed according to your income tax slab for that year.

      So be very careful how you file your returns and take advice from a good CA.

      Like

    5. well there are individual circumstances that will decide if one is a RNOR or not.
      A simple principle I work with is to return to India after 30 Sep of a given year to continue enjoying the NRI status and if a person goes back overseas within a year the NRI status would be maintained.
      There is no restriction on India’s holding foreign Bank account or investments – would like to know the clause of FEMA or IT act that alludes to this. if everything is legit and well explained which would be in case of a Salaried person there is nothing to worry about and I would not be unnecessarily worrried about the tax man.
      Simple reason I would not open a RFC account is that I do not want to put my money in either USD or GBP. I would rather hold the money overseas or designate it in as Resident Rupee account and when required repatriate using proper channels. India allows repatriating 100,000 USD per person per year on capital account from what I remember and that should be enough for any individual.
      If you have all documentation IT officer cannot include foreign remittance to income just on their whims and fancies.

      Like

    6. Yes, it is legitimate to maintain foreign account. But there are necessary compliances you must ensure, like declaring all these foreign accounts and paying taxes to Indian IT dept, on the income generated from it. If you miss these then you know how IT dept is. They are going to get more and more powerful in future and more intrusive and we could end up in a situation of guilty until proved innocent. So we just need to be extra careful and ideally hire a CA to make sure everything is in order.

      Like

  12. Thanks Aditya and Nitin.

    I just read an interesting article : http://economictimes.indiatimes.com/markets/forex/rupee-rise-shows-economic-power-govt-not-targeting-level-das/articleshow/58529628.cms

    If govt. completely leaves it to market to decide true value of rupee then what is your opinion? I think rupee will keep getting stronger especially in this environment of govt. stability and strong governance. Obviously things would react accordingly if global market crashes.

    Thanks
    Deep

    Like

    1. If the RBI leaves completely to market (aka hedge funds, hot money opportunists, speculators) the Rupee will swing wildly. There will be big moves with every little news and given there is not enough depth in Indian market people with money could move Rupee the way they want. To give perspective Apples Cash reserves are almost equal to 1/2 of Indias Forex reserves. So if Apple really wanted to buy Rupee and then dump it without any RBI controls it could single handedly manipulate and move the Indian Rupee. ModiJi is a great administrator but I think he should keep strength of currency and national pride separate and focus on building national reseverves, making Rupee fully convertible, getting to a surplus economy and targeting a zero poverty and low taxes.
      Cheers

      Like

    2. It is entirely possible that in the short term, rupee appreciates even to 58 levels to USD. Nothing should be ruled out in FX markets. The previous governor used to accumulate reserves and prevented rupee from appreciating. This governor also did the same thing for sometime but then there is a cost to accumulating reserves, it will cause a liquidity squeeze and cause inflation to flare. There is a nice article, about how China exported its way to growth and kept its currency down and built up 3 Trillion dollar reserve without flaring up inflation. They did it with reforms.

      http://www.financialexpress.com/economy/forex-policy-heres-why-it-would-be-tough-for-india-to-copy-china/649973/

      Nice article, read this fully to understand why India could possibly repeat its past mistake of letting rupee appreciate and become too strong and then it could crash again. Perhaps India doesnt have the same luxury and will like China to keep its currency low.

      But there is no point discussing what India should do or shouldn’t do. We just have to position ourselves to play all scenarios.

      Like

  13. Thanks Aditya – Please can you help advise what other risk free investments which earns 3-4% in Singapore except multiplier and 360 accounts.

    Regards
    Deep

    Like

    1. Multiplier and 360 accounts are probably the lowest of the lot. Bank of China’s saver account yields 3.55% for balance upto 60k for conditions similar to dbs multiplier and ocbc 360 account. I wrote about it almost 1.5 years back.
      Then there are investment options like United SGD Fund CL A Acc SGD which has annual avg return of 3%, Manulife Singapore Bond A SGD averages 3.5%. There are other bond funds that give relatively good return when compared to bank deposits. Ofcourse where one keeps money depends on personal needs and requirements.

      Like

    2. The BoC practically gives only 2.35% because credit card spend needs to be more than 1.5K to get 1.6% for spend between 500 to 1.5k you only get 0.8%. In my case, my 1st goal is to reduce spending because dollar saved is dollar earned. Many times I don’t cross 500 on my credit card spend. Thats why I don’t fret so much about these smart saver. I used ocbc 360 and I get only the salary and the payment bonus.

      Oh btw the BoC extra savings​ bonus is only for balance above 60k. So practically 2.35% is possible​.

      Like

    3. Hi Nitin,

      I agree that personal situations will determine what works well for who.

      Taking a simple example of salary credit, 3 bill payments and say 60k balance
      Ocbc gives you – 1.58%
      BoC gives you – 2.15%

      So even then a difference of additional 0.57% is additional earning. If one spends 500$ or more then the difference increases to 1.08% to 1.88%

      Like

    4. Hi Aditya,

      For the funds you have mentioned (United SGD Fund CL A Acc SGD or Manulife Singapore Bond A SGD), how do i invest in those? Do we need a brokerage account, if so, where to open?

      Thanks,
      Sudip

      Like

    5. I personally use fundsupermart. They do not have a entry or a exit load unlike banks who on an average charge 0.8% fee. They do charge 0.1% quarterly platform management fee which I think is very reasonable.

      Like

    6. Many banks offer ways to invest in mutual funds. For example DBS has DBS Vickers. UOB and OCBC also have.

      I personally use Fundsupermart.

      BTW, today FSM has a flash sale for Perennial real estate bond maturing in 1.5 years and yield is 3.5% net. The flash sale is some 50bps discount on the ask yield.

      I am skipping it though. I feel markets are about to crash globally and yields could spike from here

      Like

    7. Hi Aditya,

      How do you get 2.15% for BOC Smart saver with only Salary credit and Payment bonus? From their website, salary credit gets 1.2% and Payment bonus you get 0.35%. For balance above 60K you get additional 0.6% but that is only for the incremental balance. So for balance below 60K, OCBC 360 and BOC Smart Saver are equal if you are only using salary credit and payment bonus.

      The main difference is only if you are using credit card spend, BOC Smart saver gives 0.8% extra, if you manage to hit 500.

      Like

    8. Still it is better to be clear it is for incremental balance above 60k. So let’s say you have a balance of 60k + $1. It is only for the $1 that you get the additional bonus of 0.6%.

      So 1st 60k no difference between OCBC 360 and BOC smart saver, if you are only doing salary credit and payment bonus.

      Like

    9. You are forgetting the basic interest rate that they give on savings account and that ranges from 0.25% to 0.4% based on your balance and that makes a difference. The way BOC works is that you can get 1% interest on balance above 60k upto 1million and upto 3.55% upto 60k.
      So salary plus bill payment is 1.2 + 0.35 + (0.25 to 0.40) makes it 1.8% to 1.95%. So for any balance BOC is still better than OCBC.

      Liked by 1 person

  14. Hi Aditya and Nitin,

    I had set myself a limit , if effective SGD INR rates goes close to 45 I will transfer the money. This seems to be a case now, since it’s a big amount so just before I do this wanted to get your kind advise . Is this right at this time ? My thinking is that rupee will continue to get stronger and probably RBI is liking this.

    Thanks
    Deep

    Like

    1. Hi Deep,
      As always the target rate of transfer is dependent on what your money is doing in Singapore and where will it be invested in India. The NRE FD rates in India are now 6.5% and you could earn 3 to 4% in Singapore relatively risk free.
      As for Rupees strength its not so much of what RBI wants but what ModiJi wants. He has always believed in stronger Rupee and I fundamentally disagree with that stand. There are recent articles on how small exporters have started to suffer due to strong Rupee and there are talks about relaxing capital withdrawal norms. Foreign money can be skittish and leave country very quickly. As for SGD INR the recent fall is due to USD SGD moving from 1.39 to 1.4050 this morning as fed is expected to raise rates in June. Why has Indian rupee not reacted is any bodies guess. 45 in the spot market should be absolute bottom for sgd inr.

      Like

    2. I remember SGDINR was at similar levels in 2015 and then I suggested to move money to India and then SGDINR moved to above 50. But at that time I didn’t want to take the risk and still converted at 46. But it was my decision and I took it based on the information available. This time I am willing to take the risk to hold out in SGD for some more time. I think if you want to place stop loss you should place it below the previous low which I believe was very close to 45 levels. So ultimately you have to take the decision. If I were you, as I have already lost from higher levels and have come down to 45.75, why not wait for some more time. It is always better to sell on an upswing rather than a downswing.

      Like

  15. Hi Aditya,

    I was exploring at investment options in Singapore. I have an account with Fundsupermart. They allow me to trade bonds and stocks on SGX and HKEX. I am particularly interested in bonds at this time. I remember you mentioned sometime ago about Aspial 5.25% coupon bonds. However at this point, it is looks like it is trading below par. So is it worth buying now? How is your Singapore bond portfolio doing?

    Do you have any of these retail bonds?

    https://secure.fundsupermart.com/fsm/bonds/retail-bonds

    Like

    1. Hi Nitin,
      Aspial is a decent buy with around 2 years to maturity. You could also look at United SGD bond fund which gives decent returns with probably lower risk.
      Cheers

      Liked by 1 person

  16. Hi Aditya,

    Looks like INR stuck at 46 rate, Need suggestion i need to transfer some amount for repayment of loan do you think the rate will move up in next 1 or 2 weeks, also if it move up how much it can go max.

    Like

    1. Hi Snk,

      If you are paying off a loan then I would suggest converting money in 2 or 3 lots over next week or so. The max rate can move up in short term is 46.50

      Like

  17. Hi Aditya,

    Surprisingly the rates at raffles arcade dropped below what DBS is offering. Any insight would be a great thanks.

    Regards
    Deep

    Like

    1. Hi Deep,
      Most likely they managed to get rid of notes bought at a deep discount or realised that by offering a economically unviable rate are attracting unwarranted attention. Hard to say.
      Cheers

      Like

  18. Hello Aditya, I am planning to transfer 5 lakhs to India with in 20 days from now. Is it right time to transfer or should I wait for couple of weeks for better rate? Thanks in advance.

    Like

  19. Hi Aditya,

    For readers convenience, if possible please consider to place the rates at the top of this page and latest comments first. Some phone users (like iPhone) doesn’t have a quick way to scroll to the end of the page.

    Thanks
    Deep

    Like

  20. http://economictimes.indiatimes.com/markets/forex/rupee-rally-is-an-intrigue-why-is-it-rising-when-nobody-thinks-it-should/articleshow/58024349.cms

    “The global backdrop has been positive for EM currencies, particularly high-yielders like India, and the outcome of state elections has given, from the perception of foreign investors, a green light for further reforms by PM Modi,” said Mitul Kotecha, head of Asia currency and rates strategy at Barclays in Singapore. “On top of that, it does appear that the stance of the central bank has changed with regard to limiting or capping INR gains.”

    Foreign holdings of rupee-denominated government and corporate bonds climbed by about 360 billion rupees ($5.5 billion) last quarter, with 272.6 billion rupees coming in March alone, the most for any month in National Securities Depository Ltd.’s data going back to mid-2011. Overseas funds poured $6.7 billion into Indian stocks in the January-March period, of which $5.1 billion came last month.

    Like

  21. Rajan used to accumulate dollars to build reserves. This prevent rupee from appreciating inspite of the huge fall in oil prices. So the big slump in rupee in 2013 never got reversed. Now Urjit Patel is more hands off, he is not so active like Rajan in accumulating reserves. So the huge FII flows is causing rupee to appreciate.

    Like

  22. Hi Aditya,

    Is there any real event happening which is making rupee so strong? So confused ! Only Modi magic?

    Seeing rupee to go 45 by next week…

    Thanks
    Deep

    Like

    1. Hi Deep
      If you see Rupee has stabilized against the USD at 65 mark. Sharp rise from 67 to 65 caused by stability on political front (bjp winning UP).
      The reason of SGD INR weakening in past 2 days is due to MAS policy meet next week. Expectation is for MAS to stand pat which will give strength to SGD. As sgd will move towards 1.38 to USD (inline with other currencies) sgd inr will move back to 47.
      Cheers

      Like

  23. Correcting typo . After GST implementation how the rates would be . Means will SGD to INR increase or decrease .. what min and max rate we should expect .

    Like

    1. Historically GST benefits take 18 months to realise and in the interim there is a impact on gdp. Gst implementation will not be the sole factor that will impact INR rates, monsoon, domestic and international political situation and global trade will all have a part to play and as such I cant give you a range as of now. However you can find information from established research houses that ranges from 42 to 52 which to me is ridiculous and as good as saying they have no clue which way things will move. Fundamentally INR has strengthened too much and too quickly and should ease off as the new financial year in India begins. 47-48 is a good range for next fee weeks.

      Like

  24. Thanks aaditya . After THAT implementation how the rats would be . Means will SGD to INR increase or decrease .. what min and max rate we should expect .

    Like

  25. Hello aaditya , Are there any chances of SGD to INR going​ around 48 to 49 ? If yes around what time. or shall we consider 46.5 is max and stable rate .

    Like

    1. Hi Piyush, you can get 48.30 in the cash market in Arcade even today.

      47 would be a stable rate for next 2 months till the monsoon season and gst implementation kicks in around June end time frame.

      Like

  26. I have transferred all my earnings until 2016 to India. But this year I am planning to accumulate SGD here. The outcome of UP elections and the chief minister selection is not at all confirming to me. I have read a lot of conspiracy theories, from cooking of books for GDP figures to India completely getting away from democracy. So as a safeguard I would like to accumulate SGD here. But I am not sure how long I will stay here and how easy it will be to maintain assets offshore once I go back to India and become a resident there. Any thoughts?

    Like

    1. Cooking of books is a real possibility, China has done it for many years and India produces enough smart Accountants every year to make numbers what the government would want them to be.
      You can hold assets in Singapore even after you return to India, there is no restriction on that. Use online banking and subscribe to online statements and you can easily manage everything.

      Liked by 1 person

    1. It’s worth reading another article
      India Hunts for Solution to Bad-Debt Crisis as Measures Fail https://www.bloomberg.com/news/articles/2017-03-20/india-hunts-for-solution-to-bad-debt-crisis-as-measures-fail
      Atleast for Singapore defaults are out in open the quantum is known, for India its all estimates. A good gauge of degree of bad debts is price to book value which for banks like Central Bank is at a 30% discount. Which means the market is pricing a 30% default rate and if banks cannot recover 30% of their outstanding loans then the size of defaults would be bigger than Singapore.
      What that fundamentally means for Rupee, I don’t need to spell out.

      Like

    1. INR rally has been overdone. The fundamentals for Rupee has not changed and a strong Rupee will hurt IT companies that are big employers. The employment numbers haven’t improved in the past 2 years which should be a cause of worry for Mr. Modi.
      On the flip side Singapore Dollar against USD should appreciate as economic data is looking better. So I think 46.5 would be absolute bottom for sgd inr and the rate should move back towards 47.5 in 2 weeks time.

      Like

    1. Hi,

      The sgd2inr site aggregates the various available exchange rates but is not always up to date. I would recommend using the widget on this site for better accuracy

      Like

  27. Interesting day in the markets. Nifty hits 9k. Rupee has just shot up to sub 66 levels to the USD. 10 year bond yield hasn’t budged. RBI reserves comfortably at 364B. Oil prices sub $50.

    Like

  28. Hi Aditya, Nitin,

    I wanted to seek your view/ advise on NRE FDs offered by RBL ( Ratnakar Bank ). RBL is offering 7.5% interest rate on long term FDs upto 20 years of locking period.
    1. Is it advisable to create FDs with such long duration considering the rates are going to be lower in coming years?
    2. Is it ok to trust creditworthiness of a bank such as RBL for such long tenure FDs?
    3. Or is it better to go with 2-3 years locking period FDs.
    4. Or create multiple FDs – 25% amount with 2-3 years locking period, 25% amount in 5 years locking, 25% in 10 years locking, 25% in 15-20 years locking.
    5. What happens if someone returns back to India in between the NRE maturity tenure. Do he needs to pay the tax on NRE FD interest income after maturity ?

    Thank you in advance for your suggestions.

    Like

    1. Hi Rahul
      No one can predict interest rates for 20 years so to assume that rates will be going down perpetually is not a wise assumption.
      Again it’s near impossible to say how a bank would perform for next 20 years and the credit worthiness situation can change from one year to another. The FD are only guaranteed for 100,000 Rs. by RBI and rest is unsecured loan and theoretically you could loose everything over the guaranteed amount if the bank goes bust.
      If you return back to India then you can continue to hold your NRE FD’s for a max of 2 years before they become resident deposits.
      If you can really put away money for 20 years then invest in index etf. But for fd’s spread your risk across banks.
      DBS offers 7.5% in the 2 to 3 year bracket and could be a good alternative

      Like

    2. If you don’t need money for 20 years that means it is for long term. For the long term equities are the best asset class. FDs are good for short term holding until equity markets fall or if you are really risk averse. Think about it this way, how low will interest rates fall? My take is that interest rates have mostly bottomed out and they cannot fall without inflation flaring. If you are expecting long term rates will fall a lot like 4-5%, then you are assuming that India is going to become a middle income economy like Thailand, Malaysia or China. If indeed India has potential to become a middle income economy then there is far more potential in equities. Sensex should hit 100k. So you see, there isn’t much logic to lock into FD at these rates for the long term

      Like

  29. Hi Aditya and Nitin,

    How much upside do you see in INR vis a vis SGD post these state election results? I was looking for an opportunity to repatriate large sums of INR to Singapore.

    Thanks in advance,
    Ankieth

    Like

    1. I think the state elections results impact is sentimental as fundamentally nothing changes immediately. To me the more interesting thing is oil has started falling again and so is gold. This is very positive for the rupee and negative for Singapore. Rise in US rates and some more oil related bankruptcies in Singapore could be possible.

      I think it is a good time to repatriate to Singapore if you are planning to buy some property or something.

      Like

    2. Hi Ankieth,

      The Indian markets are closed today for Holi and from tomorrow the Fed interest rate meeting starts. The outcome of the meeting in form of a rate hike is already priced in the market. Additionally RBI would try it’s best to keep the Rupee stable and not let it fluctuate too much.
      There should be short term Rupee strength tomorrow and day after. After which fundamentals will come into play again. The amount of NPA or bad debts in the Indian banking sector are large and should be a cause of worry for everyone. Singapore has had its own banking woes but that is already well known and banks have taken hit for those bad loans.
      So in summary I think that SGD INR would hover around the 47 mark in the coming weeks.

      Like

    3. Thanks Nitin & Aditya. Actually Im looking long term 1-2 years horizon; any chance of SGD/ INR moving towards 45, considering the prospects of speady reforms have improved. GST implementation is also round the corner.

      Like

    4. It is possible, but unlikely in the short term. In the long term or 1-2 years, it would be speculation as currencies are extremely hard to predict. I would suggest depending on when you need the money and where you want to put it, take a call.

      Like

    5. It is to pay off home loan currently at 1.6%. I have option of renewing keeping monies in India and renew NRO FD at around 7%.

      Like

    6. Let’s assume you earn enough interest in India to be in 30% tax bracket, your post tax return on NRO FD is 4.9%, add in cost of transferring funds -appx. 1% the differential would be 2.3% which is appx. 1 Rs. move in SGD INR. So you could move your money to short term debt funds which have the potential to yield higher returns and have target to bring money to Singapore every time exchange rate is 45.5 or below

      Like

    7. Thanks Aditya & Nitin. So 45.5 is possible? As of now Im comfortable holding funds in India, but things may change if the home loan rates start rising in SG.

      Aditya, which short debt funds would you recommend with a 12 months horizon? Will that also be subjected to tax in India? Have never invested in debt funds, so pardon my ignorance.

      Like

    8. Will figure out whether ultrashort term funds would fit into my short term investment goals and risk profile vis a vis investing in a fixed deposit. Thanks for providing so much insight; truly appreciate it!!

      Like

    9. I think you should keep the money in India if you are able to manage your cash flow by paying the loan using salary savings. Just monitor on a 6 monthly basis, if INR is falling more than 5% annualized against SGD, then re evaluate.

      Like

  30. hi Aditya,
    I would like tot ransfer 40K SGD to India for planning to buy house in next 2 to 3 months. is it right time to transfer to INDIA?

    Like

    1. Hi Siva,

      I would wait for tomorrows election results before making a decision. A clear BJP win will be Rupee positive in the short run

      Like

  31. Hi Aditya,
    What is your view/advise on SGD INR rate in coming days/weeks.
    Amount to transfer around 90k sgd – To pay off outstanding home loans (9.5%) and the remaining to invest in NRE FDs (7.5%).
    Thank you.

    Like

  32. The spread in DBS is reduced 0.58% instead of the usual 0.9 – 1.0%. The others still have the same. Is this usual or just a specific offer from DBS? I know that DBS has a lock in rate the moment you book it.

    Like

    1. I think this happens because INR has become exceptionally strong. DBS has shortage of SGD and excessive INR and the risk reward is such that they don’t mind a lower spread. I think this is the same reason why money changers in Arcade are selling INR at lower than spot rate, as Aditya reported.

      Don’t sell your SGD at this rate. On the contrary long term NRIs who are looking to bring back their money into Singapore, this is a good opportunity.

      Like

    2. Nitin, I don’t think DBS has excess of INR else they will not be offering 7.5% for NRE FD in the 2 to 3 year bracket to attract funds. Also the anomalies in spread usually happen if the update to rares is not frequent. DBS usually refreshes rates every 15 minutes and given that it was a weekend the rate update mechanism might have experienced technical issues. The spread is back 75 basis points which is the usual rate that dbs offers.

      Like

    1. Ha ha, I was wondering where you saw the rates. The rates in the widget here are refreshed every 10 minutes and you can safely rely on the prices shown to know the latest rates.

      Like

    1. Indian rupee is fairly valued considering its current fundamentals. RBI reserves are strong inspite of outflows from FIIs and Fcnr repatriation. Oil prices haven’t shot up. Budget was good, fiscal deficit was not compromised a lot.

      47 is a good price. SGD is not some great super haven currency. It has its own issues, Singapore banking sector is facing bad loan issues. Trumps anti globalization stance will hit Singapore badly.

      So I won’t assume that 49-50 is a given. 47 is a fair midpoint from 45 to 50 range. 50 is the worst case scenario which may happen or may not happen.

      Like

    1. Singapore taxes are already very low and for a EP holder only the person’s salary would be taxable. There are few deductions like investments in SRS, deductions for parents living with you, child credit, donations to charity etc. that you can explore

      Like

  33. Thanks Aditya…I need 1 more info.
    I am a E pass holder. Is there any way by which I can save our Tax that we are paying.

    Regards,
    Hitul

    Like

    1. And I invested in long term gilt funds after the RBI decision. I believe the sell off on the next day was over done and once the NPA situation improves RBI will be more than happy to cut rates.

      Like

    2. To me the interest rate cycle has bottomed out or closer to the bottom now. Max we could see 2 rate cuts and that is it and from there rates will go up. In my case, my allocation to debt funds in significant so for tax efficiency purposes I have to hold them for 3 years so that I can pay LTCG tax with indexation. So I take a 3 year view. In 3 years rates will be higher, so I am sticking with ultra short term bond funds for now.

      Like

    3. RBI’s long term inflation target is 5% and theoretically benchmark rates are set to cover inflation. I think there is scope for 100 basis point rate cut over 12 to 18 months. Will it actually happen, will depend on a number of macro economic and political factors. If the rate cuts don’t happen then the currency will have to significantly depreciate to allow businesses to thrive. But yes I do agree that one should allocate asset that are suitable for their portfolio and tax situation and that’s why the latest post talk a about the tax implication for NRI’s

      Like

  34. thank you Nitin & Aditya. I am also invested in SBI Magnum Gilt. Should we buy more considering it was down by 1% yesterday?

    I also have dynamic bond fund which crashed 2.15% yesterday, good time to buy that as well?

    Like

    1. Wait till monday and let the market adjust, but yes it’s a good time to buy into Bond funds.

      On a different note DBS India is offering 7.5% on NRE deposits in the 2 to 3 year time band which I think is a very good risk free option. Most other banks are offering 6.8 to 7%.

      Like

  35. Hi Aditya,

    Can you suggest me some good bonds to invest, one Icici guy suggested me to take icici maximiser fund 5 current nav 20. What do you suggest.

    Like

    1. Hi Anonymous,
      I don’t know about the maximizer fund. I prefer SBI Magnum gilt fund assuming you have a low risk profile.

      Cheers

      P. S. Please use your actual name, I usually do not reply to anonymous questions.

      Like

    1. Oops sorry, 10 year bonds will be down by 2.5% as 1% rise in yield means bonds fall by a percentage equal to their duration. So a 25bps rise means 2.5% fall.

      Like

    2. It’s not a rise of 25 bps, the RBI has not done anything and even though market was expecting a rate cut, it was not fully priced in. The movement would be minimal and INR would gradually fall.

      Like

  36. Nitin, can you please explain in layman language. Rupee will rise in the sense that SGD to INR will be higher or lower. I am waiting to reach 49 🙂

    Like

    1. If RBI doesn’t cut rates then rupee will rise and SGD will fall meaning instead of 47.5 you will get lower closer to 47.

      49 will probably happen after Q4 results are announced and demonetization affects really hit. It could happen only in April.

      Like

    2. RBI did not cut rates and that is exactly what I was expecting. There are fears on inflation spiking and RBI would have looked stupid if they cut rates this meeting and then increased them again in the next.
      Rupee should weaken after no rate hike.

      Like

  37. Tomorrow’s RBI policy review will be interesting. Expectations are that RBI will cut rates by 25bps. If RBI doesnt cut rates, rupee will rise, Indian 10 year bond yield will rise and Nifty will crash.

    Like

  38. Hi Aditya,
    My averaging of the interest was on the basis because there was a comparison with fixed interest that Anonymous has taken. We cannot ignore the averaging part as this is the decider factor whether you have actually benefit from taking other loan. Taking the same example (30 L @9.55% for 5 years:
    The first year interest paid will be 2.65 L (if you calculate from the left over principal , it will actually be 10.6%) while the last year interest paid is just 37 K. Hence, the first year interest % paid is significantly higher than last year interest % compared to original principal. So if the Fixed Loan at Singapore is taken so that the first year principal is paid off, then I agree, it is a good deal. But if the Loan at Singapore is taken at last year (or even second last year), I am afraid, you will actually be paying more overall (as the bulk of the interest is already paid in initial years).

    @Anonymous,
    As you would see from example above, it is always better to pay off early by doing lumpsum payment for principal along with EMI so that the interest to be paid for the future months will be significantly lessor. You can download any amotization sheet and figure out for yourself what is the best amount that can be paid. One more thing. When you pay lumpsum principal, banks generally increase the tenure by keeping same EMI. Ask them to decrease the EMI and keep the same tenure. The extra money from that EMI will go towards principal.

    I believe NRI has the same benefit as the resident, you can claim both the principal and interest rate deduction. Even better if your house is rented.

    Like

    1. Hi Manja,

      The interest that is paid on a loan is a function of outstanding principal and the interest rate over the period of the loan does not change unless it’s a floating rate loan. Therefore your concept to average out loan is fundamentally flawed. Using your numbers if the last year interest is 37k then the outstanding principal would be roughly 350k and averaging the interest payment over full principal of 3000k is not correct.
      Banks issue a home loan on reducing balance principle and its not a fixed decided interest over the tenure of the loan.
      Where you are making a wrong calculation is that if only 1 or 2 years are left in the home loan then the principal would have reduced equally significantly and would not be 30 Lacs.
      So to calculate 2.2% or even 7.16% on 30 lacs and then looking at a online interest paid calculator where the balance of the term is one or 2 years is like comparing pineapples to bananas.
      Clearing off a high interest bearing loan with a lower one is beneficial irrespective of when the loan is cleared unless a interest earning opportunity of higher than the interest paid on the loan is available.
      Paying higher sums to reduce the total outstanding is similar to taking a smaller loan which automatically results smaller interest outlay.
      Moreover the suggestion I made was to not take a loan that costs 7.16% and instead go for cheaper loans available in the market to clear of the outstanding home loan.

      Cheers

      Like

  39. It was really interesting discussion Aditya, it will be very helpful if you write one Article, how we can easily pay off home loan and save big amount. please be consider things in mind :

    1. Person working in Singapore (take average salary)
    2. Took home loan in India nearly (30 lac)
    3. What all better options we can take advantage from Singapore and pay off our home loan
    4. is it worth to pay off early
    5. is it good if we increase EMI or to save amount and prepay every few months
    6. as we are NRI so not taking benefit from home loan Interest.

    Thanks

    Like

  40. In my case India is my home and I want to have that flexibility of being able to close everything in a months time and go back to India. So NRE FD is the most risk free option for me than keeping money in Singapore. Borrowing in Singapore dollars probably makes sense if you have that visibility of 1 and half years. I agree with you you for someone who wants to stay in Singapore for long term shouldn’t even touch NRE FDs.

    Like

    1. It takes less than a week to close everything in Singapore and move to India and where you want to keep your money or are most comfortable doing it your personal decision. NRE FD’s are good bet as well when the exchange rate is favorable but time and again better options present themselves (like the IRFC bonds) and a smart investor should make most of those opportunities.

      Like

  41. I actually mentioned 180K randomly. But it turns out to be accurate. Personal loans are given 4X of monthly income. So your friend must be making 15K a month to get 60K. So a saving of 6k over a period of 1 and 1/2 years. Mere mortals like me with salary 1/2 of that will save only 3k, based on my loan eligibility. 😦

    Like

    1. It’s all about percentage Nitin, the logic of investing in NRE FD over Singapore deposit applies here as well. If you don’t think one should save money on loan repayment then you should not care so much about a NRE deposit. Every penny counts towards building wealth, weather one earns it in interest or saves it by paying lesser interest.

      Like

  42. Great discussion going on. However, allow me to answer Aditya’s query on “… Multi year payment of this sort…. I will try to explain by using same example of Nitin
    30 L Loan with 9.55% monthly depreciating for 5 years.
    1. If the borrower sticks to the EMI of 63079. Then he would have paid about 7.84 L. or say combined interest of 26% or Average Yearly interest of 5.2%.
    2. If the borrower adds 25% more (15770) + regular EMI for the first 30 months (first half of the tenure) and regular EMI later, then he would have paid just 6.15 L (Diff of 1.69 L) or in other words combined interest of 20.51% or yearly average of 4.10 %

    Now if you look at Anonymous’s calculation, it was a fixed rate calculation of the interest (if I am not wrong) which comes to 4.98 %. Hence, my statement that multiple year payment discipline with additional amount at the initial months/ year of loan greatly reduces the interest. The hassle of taking a different loan (which may not be monthly deprecating type) may not justify the amount saved / lost

    Like

    1. Manja,

      Your calculation of averaging out the total interest paid over the life time of the loan is deeply flawed. Given that you are returning interest along with a portion of principal your effective rate is the rate of the home loan. The concept that you are working with will only be valid if the monthly payment was interest only and nothing towards principal in which case the total interest outlay would increase.
      The loan which anonymous mentioned was indeed a one time interest payment in form of processing fee and at that rate the gain was miniscule and not worth the hassle but if one does have a 2 or 3% loan in Singapore it’s worth every penny to take the loan and pay off high interest Indian loan

      Like

  43. In this case the savings is even less. Remember if the loan is rolled over twice, it means in the beginning of the period only 1/3 of the loan is being paid off. Then after 6 months another 1/3 and after 1 yr remaining 1/3. So you are still paying interest for the residual loan in India for 1 yr.

    My comment regarding a person’s earnings and savings is to put into perspective the amount of 6K. For someone who earns for example 180k, 6K is nothing and not worth the hassle. For someone earning for example 50k, 6K is significant.

    Like

    1. The loan is rolled over twice in Singapore not in India. So you take 60k sgd in Singapore, pay off the India loan and start paying off the loan in Singapore. At the end of 6 months roll over 60k or whatever balance is left for another 6 months and at the end of one year roll over for 6 months again. So I am guessing you got the mechanics of the trade wrong.
      If one is earning 10k a month even then 5k savings over 1.5 years is not small change and in economic conditions like now might be equal to the annual bonus (if you are lucky to get one).
      There is really no additional hassle, one just pays the monthly EMI – it’s probably lesser effort to pay in Singapore than in India as one doesn’t have to worry about the exchange rate every month.

      Like

    2. Sorry I didn’t understand. I have never taken a loan, sorry for the ignorance. But if I take a 60K loan for 6 months, am I not expected to pay 10k every month for 6 months? So at the end of 6 months, what does rollover mean? That I take another loan of 60k?

      Like

    3. Depending on the loan terms you might just get away with paying minimum interest plus a small notional principal, no more than 2k per month. At the end of 6 months they expect you to clear off the balance loan and that’s where friends or family come into play where they provide you with a bridge facility for 15/20 days and you get a fresh loan for 6 months. There are ways to go around taking help from friends and family but that’s not something I can disclose here on the site.

      Like

    4. Thanks I didn’t know this. Something new I learnt today. I had the concept of EMI in my mind. I.e. pay off loan+interest in equal installments over the tenure of the loan.

      Like

  44. Hi Aditya, I still very curious how can someone save 3L using 6 months loan rolled over twice, which means in 1 year.

    I used this ICICI calculator:
    https://www.icicibank.com/calculators/home-loan-emi-calculator.html

    Set this following values:
    Loan amount:30L
    Duration: 1 yr
    Interest rate: 9.55%

    The total interest paid is 1.5L.

    Basically it means, if someone is paying off 30L immediately, he saves 1.5L payables in interest over a year. To save 3L, he has to pay off 60L instantly which is 120K SGD. So this person saves 6K which is essentially 5% of the quantum, assuming he got the loan at 0% interest.This is a good amount. But then someone is able to save 120K SGD in a year must be some big shot. Most of us can save less than half of that.

    Like

    1. Rolled over twice means 1.5 years and not 1 year and you have your assumptions skewed.
      A simple calculation would be to take a loan amount of 30,00,000 which is roughly 60,000 sgd using rate of 50 for ease of calculation.
      Over a period of 1.5 years @ of 9.6% one would pay 4,32,000 Rupee in interest. On sgd loan one would pay 1980 sgd in interest or 99,000 using the same exchange rate of 50. The differential in interest would be 432,000 – 99,000 = 333,000 INR.
      The Indian loan is a reducing balance loan and so is the case with Singapore loan which is a reducing balance facility so without getting into the complication of reducing balance a simple interest calculation is used.
      Also don’t forget people don’t take a housing loan for 1 year or 1. 5 years, they usually tend to be for 10, 15 or 20 years and given the tenure left the the emi will constitute mostly interest re-payment and your use of ICICI calculator is flawed. If you really want to get a true picture of interest paid then use a term of say 15 years and then work out interest component in 1.5 years (you will need an excel for that, ICICI is not sophisticated yo show that on web).

      So, use the correct parameters and you would be able to figure out how the person saved 3 lacs on a 30 lac loan over 1. 5 years.

      Like

    2. And don’t confuse the issue with what someone saves yearly and the person’s earnings or how big a shot he or she is… It’s a simple method to replace a expensive loan with a cheaper one, if one can get that.

      Like

  45. I have a friend here in Singapore who took personal loan from from 10 banks for 5 year duration to pay off his India home loan. But then he is betting he and his wife both continue working. When his wife lost her job he was shitting bricks. Luckily she found another.

    Personally I wouldn’t do this. Peace of mind is more important than savings of couple of thousand dollars. I have never taken a loan in my life. Probably I never will. I didn’t also buy any house ever as my parents live in Bangalore and have a landed house. I don’t believe flats are good as investments. I have made a networth of INR 3Crs now purely investing in NRE FDs and small amount in Equity MFs. Slow and steady wins the race and it is more fun too.

    Like

    1. Nitin your net worth is also a function of your earnings and spending.
      Anyway 5 year loan hardly comes at a attractive interest rate in Singapore and the only reason I can think of someone doing it would be for a leveraged investment. Leverage comes with risk.
      I have an acquaintance who availed a 2.2% p. a. 6 month loan from Citibank to clear off home loan which costed 9.5% and rolled it over twice (that takes some good planning) and saved around 3 lac Rupees or 6k sgd and that by any means is not small amount of money. Might be a months salary for someone just fresh out of college.
      It’s not just slow and steady, but smart, slow and steady that wins the race.

      Like

  46. Aditya,
    Well, I believe it is not really that difference, simply because there are other factors at play, namely:
    1. Tax concession that Anonymous would get of the Home Loan in India.
    2. Most people take Home Loan at depreciating interest rate. Hence, we are comparing this to fixed interest rate at SG.
    3. Multi-year consideration if a small discipline of regular lumpsum principal is paid.

    So if you take all this into account, the difference may not seem as large, especially considering that Home Loan to be paid will require multi-years payment.

    The best way I have calculated for myself (as indicated in 3 point above) is to continuously add lumpsum principal monthly, quartely (whichever your bank allows without any additional charge) and make a plan. You will realize that in multi-year payment of this sort will significantly bring down the overall interest rate. This discipline may be better in my humble opinion than to take another loan to service Home Loan. If Anonymous has taken all this into consideration and still believes that is it worth the hassle, then yes.

    Like

    1. Manja,

      I don’t quite understand what you mean by “… Multi year payment of this sort…” and I would be very keen to see your calculation.
      A tax break in India on the home loan only comes into play if one has taxable income in India and even then depending upon the amount it will not be significant. Even if one assumes that all interest paid is eligible for tax rebate the effective rate of interest on a 9% loan for a person with earning taxable in 30% bracket would be 6.3%. So if one can get a loan at say 3% with reducing balance payment (which will be similar to the reducing balance emi for a home loan) it will still be a substantial saving.

      Like

    2. I think percentages are always misleading. Anyways if you are working in Singapore the expectation is that the Indian loan will be paid off fast in like 5 years instead of 15 years. Also the Singapore personal loan the EIR or effective interest rate should be used for calculation. Percentages may look like you will save a lot but quantum should be used for final comparison. Then there is FX risk and also there is the risk that you may not stay in SG for 5 years.

      Like

    3. I am talking about personal loan only and yes citibank does offer at 2.2% per annum EIR or effective interest rate for 6 month periods. I am surprised if you have never been approached for that by citibank.
      A 5 year loan is not advisable at all as the rates are crazy high in Singapore and I am not talking about that. So unless some wants to hedge for 5 years which is not advisable in my view, a short term ultra low interest rate loan is absolutely workable and a recommended option.

      Like

    4. And FX risk is a moot point when one is paying off the loan monthly. The strategy is all about reducing interest outlay. Every penny saved is every penny earned.

      Like

  47. Anonymous, your calculation may work in theory but important point is not to deviate. Old tradition tells us that it is not really wise to take one loan to clear others, but you are the best decider for yourself.

    Sumit, for india, Mutuals funds are broadly direct and regular. For direct, you can directly log on to the online sites for each of the mutual fund houses and but direct mutual funds, you would not need any demat account. If you buy it from intermediaries, like Sharekhan, icici direct, etc (including those 3 -in-one accounts from Banks) you can only buy regular mutual funds. The difference between direct and regular is the expense ratio. Direct have significantly less than regular – making direct fund more suitable. However, choose regulat if you are engaging a financial planner from the banks which discuss your goals, keeps track of your financials and provides immediate and future guidance. Some of this guidance is very valuable as you may not have enough skills and tactics to tackle the financial markets, hence then it justifies that additional expense. If you are qualified for your own then just buy direct from Mutual fund houses

    Like

    1. I don’t agree with you Manja, if I have a loan at the rate of 9% and I can get something at 3 or 4 % to clear the 9% loan then it is always wise to do so provided you have no interest free options at hand.

      Like

  48. Hi Aditya,

    Thanks, can I check how to invest in mutual fund? Dont we require a brokerage account? How do we buy and sell for India/Singapore market?

    Thanks,
    Sumit

    Like

    1. In Singapore you can use fundsupermart, they have a decent number of funds on offer. For India most banks like Hdfc, ICICI, Axis provide facilities to buy mutual funds. You do not need a brokerage account for buying mutual funds
      Cheers

      Like

  49. Thanks Aditya, right yearly it will become 7.16% DBS balance transfer. better wait for some new card promotion which have 0% admin fee balance transfer.

    Hi Manja Its DBS 3.58% for six month yearly around 7.16

    But check this DBS promotion :

    From now till 5 February 2017, apply for a 12 months Cashline Balance Transfer online and enjoy 2% cash rebate!

    Tenure 12 months
    Applied interest rate (p.a) 0%
    One time administration fee 6.38%
    One time administration fee (after 2% cash rebate) 4.38%
    Effective interest rate (p.a)* (after 2% cash rebate) 4.93%

    Illustration

    John took up a S$5,000 Cashline Balance Transfer online for 12 months

    Interest rate: 0% p.a
    One time administrative fee at 6.38%: $319

    Note: Cash rebate will be credited back later.

    John will receive a cash rebate of S$100 (S$5,000 x 2%) within 3 months from the approval date of the Balance Transfer back to his Cashline account

    Cash rebate: $100

    So yearly it will become 4.38% if pay every month min amount and in India Interest rate my HDFC (8.9%).

    Like

  50. Anonymous, which bank is charging you 3.58% as Admin charges for Balance transfer? If you home loan is still at 10% range, it makes sense to invest in the Home loan and get rid of the debt first before investing. However, it is a personal choice, I generally get rid of all the high interest debts before making any new investments

    Like

  51. Hi Aditya,

    As now rate is better what you suggest to take balance transfer (Administration fee 3.58% for 6 month) from Singapore and transfer it to my home loan (20 lac remaining with 8.9% interest rate). Or better to repay home loan by saving and repay every 2 or 3 months.

    Like

    1. Hi,

      Wouldn’t 3.58% translate to 7.16% effective interest rate for your loan? Add to it 0.8% of transfer charges the nett cost will be 8%. Your saving is going to be 0.9% which I personally don’t think is big enough for the hassle. Ask for a lower effective rate of interest and if it’s below 3% then it would make sense to avail loan and pay off the home loan in India.

      Like

  52. Hi Aditya, which brokerage account do you suggest for trading in India? I am looking to invest in Bonds, Stocks, ETF, Mutual Fund. Also, any recommendation for brokerage account to trade in other countries (US, UK, Singapore)?

    Thanks,
    Sumit

    Like

    1. Hi Sumit,
      I have no preference of one broking house over another. I would think if your bank offers broking services then going with them will make life easier from a logistics perspective.
      If you are in Singapore I think DBS, OCBC offer services to invest in overseas markets. There is another player called Phillips Securities but I have no personal experience through any of them as I prefer mutual funds instead of direct stock exposure.

      Thanks

      Like

  53. Thanks for the detailed explanation Aditya. I have a baby boy of age 2 years. Iam looking something for his future. I took 75k of nsc certificate. Iam looking for some lump sum for his future might be after 10 years and even more. I already came back to India so looking for something in India only. If you sujjest for this requirement that could be very great help for me.

    Like

    1. I would recommend putting half the amount in a Nifty Etf and dont look at the price every day. The other half in a child education policy or future plan that LIC offers.

      Like

    1. Hi Siva,

      The golden rule of investing is that high returns and safety do not go hand in hand. Higher the return the more risky it is i.e. there is a higher probability of loosing money. Fixed deposits, PPF, RBI Saving bonds and NSC are safe investment avenues and will earn between 7 to 8 percent. There are accounts for a girl child like Sukanya Samridhi Yojna which would earn 8.5%. Here the principal is guaranteed and so is earning. The interest may or may not be taxable based on individual circumstances.
      A higher return would mean taking additional risks where you can invest in stock markets, bonds or mutual funds. The CPSE ETF which opened last week was a good place to invest some money. I prefer equity exposure through ETF or mutual funds and at current valuations Indian markets can provide a 10-15% upside. I personally prefer Indonesia, Vietnam and Philippines for equity markets but these might not be viable for you after returning to India.
      You could also but some govt enterprise bonds like NHAI, NABARD etc for 10% upside.
      Investment decisions are unique for each individual based on their risk, tax, cash flow and earnings profile and its very difficult for me to recommend without having full details.

      Like

    1. Hi Siva,

      As I had mentioned earlier SGD INR is at 48 after Trump taking office. Now the key is budget, I am not hearing anything about positives in the budget and BJP will most likely loose Up elections so 48.50 looks extremely likely in next 2 weeks.

      Like

  54. I generally keep ratio of Dyanmic Bonds and Short Term Income funds. This is part of my overall portfolio to balance the high equity exposure I have invested during Nov – Dec.

    Like

    1. Going with bonds is the best way to forward in falling interest rate environment , the bonds I recommended last year are already up 15% in addition to tax free 7.65% tax free interest.

      Like

    2. Hi Ankieth,

      There are no fresh issues of bonds coming which are as good as the IRFC, NABARD and Hudco bonds that came last year.
      There is a CPSE-ETF which has opened today and closes tomorrow and should be a good place to put money. It’s equity exposure to Govt Maharatna units and I think it’s a good avenue.

      Like

    3. Those of you who applied in the cpse etf issue would be sitting on a gain of 8% within a short period of 2 weeks. So keep reading and don’t miss out my next recommendation

      Like

    4. Hello Aditya,

      I am here in Singapore from last 3 year. I want to start investing my savings. From the previous comments, I found NRE FD and bonds would be the good investment. I am not familiar with Bonds. Can you suggest me in which bonds to invest and what’s the procedure.

      Regards,
      Hitul

      Like

    5. Hi Hitul,

      For bonds you would need a account and go through a broker.

      Instead of picking up individual bonds you could go with a debt mutual fund and there are good schemes like SBI Magnum Gilt (G) or ICICI Pru Long Term Plan (G).

      Like

    6. I believe you can buy these bonds in the secondary market. The effect is the same. Currently they are trading higher because rates have fallen. If new bonds are issued now they would be issued at reduced rates. I personally prefer debt mutual funds. You can hold it for 3 yrs and then you pay LTCG tax at 20% with indexation. So actual tax is much lower.

      Personally I feel bond prices have already fallen and already price in 50bps rate cut. With US raising rates Indian rates won’t fall. So I will stick with ultrashort term bond funds.

      Cheers.

      Like

    7. Which bond prices have fallen? I only see bond prices up by 17% from the issue price in Feb/Mar 2016. India is due for more rate cuts in 2017, atleast 50 bps I would think and as the rates are cut further the bonds will go up further. The debt funds unless they have exposure to corporate debt will not yield over 6 or 7% a year

      Like

    1. Just keep watching this current upmove in SGDINR. It might continue to keep going up. Once you see that it has gone up enough and starts falling, then transfer.

      Like

    2. Hi Siva,

      2 key dates in the next few weeks would be 20th Jan, 2 Feb and then 12 Mar.
      I expect the dollar to continue weakening post 20th Jan and that should see more SGD upside as compared to INR. This should take SGD INR beyond 48, then the second trend setter should be budget on 1st Feb. No one really knows what to expect but unless there are definite moves to prop up the economy Rupee could weaken post budget. If that happens then sgd inr could easily cross 49 and the big trend setter would be the state election results in March. If BJP does not win UP then implementing bills like gst will be even more difficult and Rupee negative.
      Ofcourse RBI would continue to intervene in market and if the reserves keep falling then Rupee will start getting setup for a melt down.

      So depending upon how much money you have here and what you want to do with it in India you could transfer around these dates.

      Like

  55. After sometime just below 47 – today it rose significantly above to 47.3 – Is the upward movement expected or good time to transfer some money back to India?

    Like

  56. Hi Aditya,

    USD INR falling while SGD INR rising and this is exactly opposite of the last few weeks. Usually both either rise or drop but normally not opposite to each other. However you explained this earlier on 10 Dec., but today I see exactly opposite happening.

    Any latest insight in this is highly appreciated.

    Regards
    Deep

    Like

    1. Hi Deep,

      The current movement is due to the fed statement of “neutral rate policy” and better than expected Singapore economic data. Fed statement basically means that fed might not raise interest rates as quickly as anticipated by the market.
      USD SGD had fully priced the fed rate moves and also negatives on Singapore economy for next year and with data counter to what was expected SGD jumped against USD.
      On the other hand RBI has been trying to keep Rupee stable and had not let it fall in line with market expectations by open market operations. So SGD appreciated more than INR against the USD and you have this move. As I have mentioned before, MAS is pro active and lets SGD adjust quicker to market news whereas RBI has been playing a much more active role in the market to manage volatility.

      Hope that helps.

      Like

  57. Thanks Aditya. I can see http://sgd.2inr.com/ that gives rates across different modes, but not sure if that is correct one at that time (as some can be indicative and some guranteed, like DBS). Is there any other site for this kind of spot check?

    Like

    1. You can check the widget on my site itself. It covers rates from DBS, ICICI and Hdfc. SBI tends to be 6 or 7 cents better than DBS but I prefer DBS for convenience sake.

      Like

  58. What is the preferred mode of Transfer of SGD to India? I see that DBS offers the best rate across any bank which are locked when you are transferring and they are very fast – within 1 – 4 hours, if done before 4:30 PM SGT. Are there better alternatives?

    Like

    1. SBI or DBS give the best rates. ICICI rates updates are not as frequent so if the spot rates fall and ICICI hasn’t updated the rates one could use that. In a nut shell, check all providers while transferring and don’t use a rate that takes more than 0.80% of spot as spread.

      Like

    1. Next week should be very interesting from a Rupee perspective, people have been waiting for 30th Dec and really want to see what’s next. In the next week new positions for 2017 will also be taken. FII have been net sellers in the past 2 months in the Indian equity markets and I don’t think the trend would change in first 2 months of 2017.
      The key would be if RBI is able to cancel enough currency notes to write off for bank bad debts.
      From a balance sheet perspective it will look good but the fundamental problems still stay as is – how does one prevent bank officials from recklessly issuing loans to big corporates and why does a small enterprise not get the same write off benefits as the big companies.
      And then there would be the budget.

      Like

  59. Hi Nitin,

    I am SPR and didn’t transfer to India for about 3 years. Given the better rates during July to September wanted to transfer however I hold my decision in anticipation of better rates due to demonetisation and US election. Instead I see INR outperformed and all the analysis didn’t work as anticipated.
    Hence now I think better I should transfer before rates fall further. As you see every month rupee is getting stronger from 50 in July to now today 46.50.

    Hi Aditya,

    Rupee appreciated from 50 in July to 46.50 today, and with current trend it’s soon be touching 45.
    And let’s say that happens, we would have an opportunity to buy back SGD or else NRE FD continues to give a 7.10% tax free return. Not locking current current FD rates will also cause a further loss.

    So that’s why I felt not good to keep 100-200k here anymore.

    Thanks
    Deep

    Like

    1. As you are SPR, and if you are planning to stay here for a long term, you should do SIP and build a portfolio of equity mutual funds. You can open an account with fundsupermart, it has a whole host of global mutual funds, ETFs, bonds and also you can trade SG and HK equities. You must invest in equities, there is no getting away from it if you want to build a nice retirement nest. Keeping 100-200K in SGD bank account is not good.

      I used to invest in fundsupermart funds, like Aberdeen Global opportunities etc it is very good. However, I am not a PR, so I might have to return to India anytime if my EP gets cancelled, so I cant think long term about keeping money in SG.

      Like

  60. Hi Aditya, Nitin,

    Reading all these discussions and news I see INR getting stronger in future so believe I have to take my decision to start making daily transfers to INR and wait for time to buy back SGD in future to compensate the loss since July 2016 (if market allows!). Hope it’s a right decision?

    Thanks
    Deep

    Like

    1. If you need the money in future in SGD, then you shouldnt transfer to India. Transferring to India is usually a one way bet. It is extremely difficult to predict and time markets. If you are doing 2 way bets, there are chances you will lose both ways. i.e. you might end up transferring to INR at a bad rate and then having to transfer back also at a bad rate, if the direction changes. Also not to mention transfer charges.

      I would be interested to know why you need the money in SGD, unless you are a PR. Indians are not getting PR in Singapore, it is a known fact. Also buying a property in Singapore without a PR is a losing proportion.

      Like

    2. Hi Deep,

      If you can’t earn 3 to 4% in Singapore then yes, you are better off by investing in NRE fixed deposits. If you can then adding the transaction costs unless Rupee goes back to 45 or 46 there will be no real gain.
      I personally am not transferring at these exchange rates

      Like

    1. I saw that article and it’s calculations are deeply flawed. Let’s take the paragraph
      “….. The rupee will earn 5.9 percent, including interest, by end-2017, the highest total return in Asia, according to Bloomberg surveys of strategists. The Singapore dollar is seen handing investors a 0.8 percent return in the period.. “
      The indian bonds yield 6.5% as of now, Singapore govt bonds yield 1.8%, the differential comes out to be 4.7% before any transaction cost. Add in the transaction cost and you are looking at a differential of no more than 3%, using interest rate parity SGD INR should depreciate by no more than 3% which it already has. In other words the bad news on sgd front is already built in the sgd INR exchange rate. INR on the other hand has been propped up by RBI and the impact of demonetisation and possible non implementation of gst from 1st April onwards would impact the Rupee. The oil prices are set to head higher and UP elections are around the corner.
      And I take all these analysts with a huge pinch of salt, Goldman retracted it’s 2016 predictions with 6 weeks of start of 2016 and I personally would not be surprised if they back track again come 2017. The fact is that the world has become a unpredictable place and Fundamentally Indian rupee is overvalued.

      Like

    2. True, the analysts can be wrong. My point though, is out of all currencies in the world, SGD has been singled out as the best short against INR. So there has be something to it.

      Like

    3. So basically they have be wrong on 2 counts. 1)INR has to fall 2)SGD has to rise. Even if they are right on one count, it is still better to keep converting SGD to INR without worring. To me now, it is a big risk keeping money in SGD, if your ultimate aim is to move the money to India and retire there.

      Like

    4. Nope, they have been wrong on just one count – twisting data to prove a point. They are free to come up with any recommendation that they want for a future trade but misrepresenting data is not ethical.
      Worth referring to the article here where banks had their calls all wrong within 6 weeks of 2016 – https://www.google.la/amp/www.ibtimes.com/goldman-sachs-5-trade-calls-big-bank-has-gotten-wrong-year-2301656%3famp=1

      And I don’t see 2017 being any different

      Like

  61. Hi Nitin/Aditya,
    Is there any benefits of investing money in bitcoins (Crypto Currency). It seems good option for investment. From last 3 months it got increased from 800 SGD to 1400 SGD. Do you guys have any idea on this. Would appreciate your help.
    Thanks a lot in advance.
    Regards
    Arin

    Like

    1. Hi Arin,

      Crypto currencies are high risk, high reward game. If you look at historic price movements it has also fallen from 800 to 400 within a period of weeks. Also don’t forget all the hacking incidents, So if you have the risk appetite to loose 50% of your invested amount go ahead and invest and if you make 50% then feel happy. I personally stay away from them.

      My preferred avenue of alternative investment is collectibles.

      Like

    2. I agree with Aditya. I personally don’t invest in anything that I don’t understand. I certainly don’t understand bitcoins. I prefer traditional investments like MFs and FD. Slow and steady win the race. Be there for the long haul for retirement savings. You won’t lose money, especially in India. By default we are from the right country as far as investment potential is concerned.

      Like

  62. Hi Aditya, Nitin,

    I see this is a kind of strange market situation where we don’t really know where INR is heading as compared to other currencies (especially SGD as I am more concerned about this). If you were in my place would you keep SGD or transfer at this stage? I am not really great fan of equities so depends on a risk free NRE deposits.

    Thanks.

    Like

    1. Hi Deep,

      I would diversify, i.e. Keep money both in NRE account and in Singapore. Debt funds in India are a good bet as at some stage a rate cut is expected. I would stay away from equities as they are over valued in my opinion.
      Also the decision to keep money over here in Singapore or in India depends on what is your end goal. If you plan to bring back the money to Singapore then I would suggest to not bother as the interest differential is not worth the hassle but if you want to remit to India and leave the money in India then go ahead and make a transfer.
      I personally do not transfer unless I get a rate of around 48 (47.90 is as good as 48, if you get what I am saying ;)) but you may decide on a number that works for you.

      Like

    2. I think now is not a great time to transfer. If you don’t need the money in India immediately, you should hold on to the SGD and wait for a spike. I think you will get spikes every now and then. Make use of them to transfer to India. INR has been extremely resilient, totally unexpected by anyone. We need to see what is RBI’s view on INR. Rajan was staunchly against depreciation of INR to aid exports. He had said INR rate is just perfect. Now oil and gold are not expected to go up too much, so CAD can be contained. May be INR won’t depreciate as expected by most people. So far Urjit Patel has been totally unpredictable. He stumped everyone during both interest rate reviews. So it is not easy to predict how INR will move. Best thing is not to as accumulate too much SGD here unless you are a PR and want to retire here.

      Like

  63. Even Madhu Kela, head of Reliance MF agrees that this act of the rupee is remarkable:

    Like

  64. India’s economy pips UK for 1st time in 150 years
    http://economictimes.indiatimes.com/news/economy/finance/for-the-first-time-in-nearly-150-years-indias-economy-surpasses-that-of-united-kingdom/articleshow/56066084.cms

    Another indication of how strong the rupee is. It can be debated whether fundamentally India rupee deserves to be so strong or not. Also you can argue that this is more of UK problem rather than India’s strength. But then Euro also same story and JPY too. All these currencies you can argue have their own problem. But hello! These are all the major currencies, other than USD. So bottom line INR has been a rockstar 🙂

    Like

    1. This is another case of sensational journalism and twisting figures to create news for the sake of creating news and pushing one’s own agenda. Why do I say twisting figures? refer to the exchange rates used for this jugglery in the article

      “….UK’s 2016 GDP of GBP 1.87 trillion converts to $2.29 trillion at exchange rate of GBP 0.81 per $1, whereas India’s GDP of INR 153 trillion converts to $2.30 trillion at exchange rate of INR 66.6 per $1,” the report said”

      The comparison is using today’s GBP USD exchange rate and a fictitious INR USD Rate. As of today the USD INR rate is 67.80 and if one used that rate the Indian economy would be at 2.25 trillion USD and not 2.30 trillion USD.

      Even if one averaged out USD INR rate it would be conveniently over 67 and average of GBP USD rate for the whole year would be over .81, thereby increasing the gap substantially in pounds favor

      Now, do I have a problem with India surpassing UK’s economy? No, not at all, but I do have a issue with news agencies twisting data to prove a point that doesn’t even exist.

      Tomorrow we might get an article that uses rate of 62 and say India’s economy is bigger than that of China 😛

      Like

  65. I was doing some calculations. If INR were to fall to 75 to the USD, which is the expectation in the next 2 years. Mind you 75 is a big fall. Big big fall. Also assuming our dear SGD doesnt fall at all and remains at this same level of 1.441(which is unlikely, it is bound to fall). Then we SGDINR of 52. This is a 10% depreciation. So worst case scenario we will have if you transfer money to India now is you will lose 10%. Now consider doing an FD of 5 years at current rate of 7%. No brainer, transferring money to India is always the best option.

    Like

    1. Add to it the cost of transferring funds to India and transferring them back (I hear banks charge 1.5% to remit from India) and your equation would show bigger losses. For anyone borrowing in Singapore and transferring it will be a situation of loss, only if one intends to transfer money to India and leave it there and also has no avenues in Singapore or anywhere else to invest that yields 3.5% or more then the trade is beneficial. Other wise 3.5% (yield in Singapore) + cost of transfer to India (0.8%) + cost of transfer back (1.5%) does not leave much of an arbitrage… 3.5% vs 4.7% (7 – 0.8 – 1.5).
      INR did fall from 58 to 68 all within BJP’s regime so a move will not be a surprise

      Like

  66. Amazed by the strength of the Rupee! Just have a look at how Euro has fallen against the dollar, it is at 1.04 now. Still rupee hasn’t broken 68 yet. Expectation was rupee to go to 70s. Rupee is like the new Gold! Best currency!

    Like

  67. Thanks Aditya . However I am bit unclear (may be due to my limited finance knowledge) that why you don’t consider the fact that now banks has huge pool of money due to deposits and government is now much richer due to zeroing of lot of black money post demonetisation . Interest rates are already 2% lesser on much bigger pool of money.

    So with all this why don’t we think that in coming weeks currency will become stronger as such that we are seeing it since past few weeks?

    Thanks

    Like

    1. Hi Deep,
      Money circulating in the economy is better than money sitting in banks. The larger the pool of money in banks the higher would be the interest outlay. So even with lower interest rates the total interest outlay might go up.
      As to govt being richer I don’t think its that large a amount nor does it make any difference in the sense that the slow down in economic activity will more than offset any gains from tax collection.
      The amount of bad debts that the banks have is phenomenal and the hope is that some of the tax collection will help offset that. Will it actually happen only time will tell.
      The key would be impact on agricultural produce and crops given the demonetisation happened right at the start of sowing season. Overall there is expectation of slow down in growth and lower GDP with this exercise and that cannot be currency positive.
      Moreover India cannot afford a strong currency if it wants to be competitive in the global markets. So weakening it’s currency in line with China would be a prudent strategy for India.

      Like

  68. Hi Aditya,

    Please can you help to advise, In current India situation , if FED increase the rates how it will impact SGD INR?

    I am still pending to make transfers which were planned in September.

    Thanks
    Deep

    Thanks
    Deep

    Like

    1. Hi Deep,

      Fed has raised the rates and this hike was already priced in and that’s why you see hardly any reaction in the markets.

      The real factor is how would Rupee react – with the gap between US and Indian debt narrowing there should be Rupee weakness unless RBI has different plans to keep Rupee strong. With demonetisation and policy uncertainty in India there is no logical reason for Rupee demand.

      I am personally waiting for Jan next year for Rupee to crack and keeping money in bank accounts and money market funds here that yield around 3.5 to 4%

      Thanks.

      Like

    1. I think it is short term trend, but difficult to predict longer term. I was watching bloomberg and the analyst made a good point. Apparently, currently we are in a risk on trade, all safe assets are falling, like gold, bonds etc. The dollar is appreciating at the same time Emerging market stocks and currencies too are appreciating. FIIs have been buyers in Indian stocks last 3 days in a row and have a look at Indonesian Rupiah too, It has appreciated in line with Indian rupee. Singapore dollar on the other hand has languished, because of lot of doom and gloom, especially in the media. There is high chances MAS will ease SGD into a depreciation from neutral policy, I think.

      Like

    2. There is a big fundamental disconnect – Indonesian stock market has done exceptionally well in the past year. Straits Time index has also been on the uptick in the past 3 months as SGD has weakened. FII are extremely fickle and can start selling as soon as bad economic data starts to come out unless India does a China and manipulates the data to portray that demonetisation has had no impact.

      Like

  69. Hi Aditya,

    It seems SGD INR pair no more influenced with USD , last few day rupee keep getting stronger w.r.t. SGD. Is there an USD independent factor acting underneath causing falling SGD INR? As a result of demontization?

    Thanks
    Deep

    Like

    1. When I look at some of the other crosses. USDEUR, USDJPY and USDSGD, I notice that SGD has fallen in line with EUR and JPY against USD. The DXY which is dollar index also shows that that Dollar is at its peak against its trade weighted basket of currencies.

      https://www.bloomberg.com/quote/DXY:CUR.

      So at this point, it is not SGD’s fault. It is just that INR that is superbly strong.

      Like

    2. I don’t think so, anticipating a rate cut the Rupee had gained from 68.80 to 67.70 and should have given up the gains when the rates were not cut. So it’s RBI intervening in the markets by jaw boning behind the scenes.

      Like

    3. Hi Deep,

      Most likely RBI is being instructed by Ministry of finance to prop up the Rupee who in turn has discouraged the traders to not take positions against the Rupee (there was a article somewhere regarding this). Fundamentally there is no reason for Rupee strength, industrial production has fallen and business sentiment is suffering. GDP will take a hit due to demonetization move and consumer confidence is trending lower as well. Rupee had strengthened in hopes of a 50 basis point cut so attributing the strength to RBI keeping rated stable is also not logical.
      My take is that RBI is strengthening the Rupee in the short term so when the 3 qtr economic results come out the fall in Rupee does not breach 70 mark against the USD.

      Like

  70. HI Aditya,

    Thank you so much for your reply, but one thing I need to check with you, if they transfer to my NRO account, the money would be taxable or not ? It’s around 20 lakhs INR.

    Thanks

    Like

    1. If it’s a bank transfer to your NRO account no questions should be asked and there is no reason for anyone to even question the taxability of the amount. Even if someone asks you have documentary proof that it was a loan that you had extended which is being returned. Please do not have them make cash deposit of 20 Lacs to your account. That will raise unnecessary questions.

      Like

  71. Hi Aditya,

    I have transferred money from my NRE Account to my relative as he was in need of money through RTGS, but now when he wants to return my money via same RTGS to my NRE account is not possible as they will not accept transfer in INR. So my question is how can retrieve that money from him ? Can I ask him to do RTGS into my savings account.
    Is my money become illegal (black) ?
    Thanks in advance for your help.

    Thanks & Regards
    Arin

    Like

    1. Hi Arin,

      It’s true that your relative cannot return money in INR to your NRE account. Money in NRE account is fully repairable and thus such transactions are not possible.
      You could ask your relative to transfer money to your NRO account if you have one or any other Indian Bank account that you may have.
      As you have evidence in the form of RTGS to his bank account and the money being returned back is accounted for you do not have to worry about black money.

      One other option could for the person to transfer the moneys equivalent in SGD or USD (based on where you are located) to your overseas bank account. You can then use this foreign currency to remit money back into your NRE account. I personally would not go down this route given the cost involved with transferring funds overseas and back.

      Hope this helps.

      Thanks

      Like

  72. Hi Aditya,

    Any reason for SGD falling against USD since 1st week of Nov. ? Earlier we used to see SGD and USD in sync against INR.
    In near future do you see SGD getting appreciate against USD ?

    Thanks
    Deep

    Like

    1. Hi Deep,

      All currencies have fallen against the USD in the past month, first week was election uncertainty and then after uncertainty due to Trump victory. SGD tends to react quickly to any market news as compared to INR as MAS is happy no to intervene until the SGD breaches the band. RBI on the other hand tries to smooth out the volatility and intervenes in the market with nearly every volatile move. Sgd might stay around the 1.40 mark but I do see Rupee touching 70. It is extremely overvalued and needs to correct.

      Thanks

      Like

  73. Hi Aditya and Nithin,
    Thanks for keeping this blog live. My working contract here is likely to be ended in couple of months and i also like to return back to India. And i have to transfer around SGD 50k. max i can keep it till may’17..
    Most of the sites predict INR is strengthening further (due to demonitisation) and USD will fall down(due to president-elect).
    – When is the right time to transfer?
    – What is the forecast for low – high range?
    Your inputs are much appreciated.

    Like

    1. Hi Abishek,

      My suggestion would be to not try and time the market and transfer money in small chunks. In your case your long term home base is India and the Indian fixed deposit rates are still attractive. You should open a NRE FD as you transfer the money to India. Depending upon how long you have been in Singapore or overseas in the past you will enjoy the NRI status for upto 2 years after return. The NRE FD rates are also most attractive in the 1 to 2 year band. So instead of focusing just on the exchange rate that you will get, also take I to consideration future taxes on your investment from the remitted money.
      If I were you I would transfer 10k at a time over next 6/7 months. As to answer your question on the range 48 is a very very strong support (for me a 47.8 and 48 are not very different) and the upside would be all the way to 50 in your time frame.
      Reports that the demonetisation move is Rupee positive is misleading – the impact on trading and business due to demonetisation is immense. I know of people in business who have stopped work in factories due to non availability of small notes that are needed to pay the daily workers, tourists are impacted due to note unavailability and this is the start of tourism season. All the taxes collected cannot be enough to recoup loss of daily business and the cost of demonetisation. Within 2 weeks time reports of negative impact to economy will start to emerge and Rupee should react to that (unless RBI steps in to manage the currency). So don’t panic and let the dust settle before doing anything

      Liked by 1 person

    1. It’s because SGD has fallen more than INR against the USD. Sgd usually is quicker to react so I expect the SGD INR rate to edge up back above 48 in around a weeks or so’s time.

      Like

  74. Hi.. we have not transfered any amount from last few months to india. and now we have almost 50k around here in singapore. can u suggest how we can get any intrest on that as in right now it is in dbs and there is no intrest. thanks for keeping this blog.

    Like

    1. Hi Nidhi,

      DBS, UOB, BOC, OCBC all have higher interest accounts, where one can earn interest of upto 3.88%. Standard chartered has come up with a new offering that allows for higher interests on upto 100,000$.
      You could also invest in short term money market funds that can earn anywhere between 2 to 6%.

      Thanks

      Like

  75. Hi Aditya and Nitin,

    Need an advise, Do you think in current situation, whether should I keep holding my $ here or transfer ASAP to at least to grab FD rates?

    Thanks

    Like

    1. Hi Deep,

      I prefer keeping the money here if you are able to invest in higher interest bearing accounts with DBS, OCBC, BOC etc. Or invest in money market funds.

      The interest rates differential between Indian and Singapore is hardly 2.5% now (assuming your Singapore funds yield atleast 3%).

      Also Rupee has slowly started to fall and it cannot remain insulated to the global turmoil. The USD INR has moved sharply to 67.60 and I am personally looking for a 69 mark. RBI will not let Rupee cross 70 as it will give political parties a reason to blame Mr . Modi’s decision of demonetisation for Rupees fall.

      Like

    2. Hi Deep, It depends on what you want to ultimately do with the money. If your intention is for long term investment in India, then it is better not to try to time the market and transfer regularly similar to SIP in MFs. FD rates in India will fall further in the near term. Nobody can predict how the exchange rates will move.You have to decide which is your base currency and which is the investment currency. If INR is base currency then you are taking FX risk when you keep in SGD, risk and reward go together. If investment currency is also INR you dont take any FX risk and there is no reward from INR depreciation also.

      If you want to take FX risk, then why SGD, that is the question you should ask yourself. If you are saving up in SGD in big amounts. Just because we are earning in SGD doesnt mean we should take SGD FX risk. Just like companies hedge their FX exposure, we should think about it in similar terms.

      Another factor, if you accumulate too much of foreign exchange, it might become difficult to transfer it to India, in the future in bulk with close scrutiny on money from abroad and there could also be taxation changes in India. This is not likely to happen, but it is a risk to consider.

      Like

    3. Legitimate transfers from NRI would never be scrutinized unless India goes down the route of US who charge tax on their citizens global income even though they are not in US and I don’t see that happening unless Indian passport becomes valuable like US.

      Like

  76. The SBI website shows rates were last updated on 24th Oct before this black money deposit frenzy. I guess FD rates will now quickly fall to 6% and then 5.5% over the next 1 year.

    Like

  77. Rates are falling like a rock in India. SBI’s 5-10 year FD now yields 6.5%! I have ICICI and Yes bank accounts. ICICI shows 7.25% on their website, but when I opened the deposit, it was 6.9%! They updated their rates in the back end but forgot to update in their website. Finally transfered the money to Yes bank and booked a deposit of 5 years at 7.25%. I guess last 3 years long term debt has been the best performing asset class. But from here how?

    Like

  78. Hi Aditya,
    Thank you very much.
    My money with DBS.
    I can wait 1 or 2 months also.
    In 2014, conversion rate touched 45.4 in one point of time.
    Now, Is there any chances to go 45 again.
    what would be the impact of implementing new currency in India on SGD to INR conversion?
    Thanks& Regards,
    Phani M

    Like

    1. Hi Phani,

      Anything is possible in the short term but fundamentally at 45 the INR would be extremely overvalued. No one expected Mr. Modi to demonetise 500 and 1000 Rs. Notes, similarly if a war happens or something unexpected then markets can go into a turmoil.
      The dust should settle in a week or so time and SGD INR should be back above 48 mark

      Cheers

      Like

  79. Hi Aditya,
    I have 35k SGD. In future how it will be the SGD to INR ?
    Can i Trnasfer now or wait for some time?
    Please suggest me
    Thank you…
    Phani

    Like

    1. Hi Phani,

      My suggestion would be to wait for the dust to settle before making a transfer. SGD is weakening in anticipation impact on TransPacific Trade deal and INR appreciating due to demonstration move. Let the markets settle in one or 2 weeks and then decide on transferring. I am assuming your money here is parked in one of the high yielding accounts with DBS, UOB Ocbc or BOC

      Like

    1. TRUMPS win is almost confirmed. He is short of just 6 seats. The real moves should start to unfold when US markets opens later in the day but for now SGD INR is back at 48 levels after briefly dipping below overnight.

      Like

  80. Hello Aditya,

    I have exchange some SGD to INR from Raffles place for India visit because of better rate. All 500 and 1000 notes. We have planned to visit in December. Is there any issue to bring INR curreny to India due to current decision on notes Or should I convert back to SGD?

    Regards,
    Hitul

    Like

    1. Hi Hitul,

      You can safely bring INR to India. Legal limits are 25k Rupees per person. You will not be able to use these notes for spending though and will have to deposit them in a Bank account and then withdraw notes of other denomination for spending.

      Like

    2. I think you can convert at the airport itself in India. But you cannot convert it here to SGD. Already tried and tested. I went to couple of money changers and both refused to take Indian notes. I guess they get these kind of information very fast. Understandably so.

      Like

    3. You can convert up to 5000 Rs. Per person in 500 and 1000 denomination notes at any Indian airport as a incoming person. Rest will have to be at the bank.

      Like

  81. Hi aaditya ,will the ban on existing 500 and 1000 rs notes decision impact sgd to inr ? When will be good time to convert sgd to inr ?

    Like

    1. Hi Piyush,

      My personal view is that it would impact the economy as jewelry and property transactions should go down in the next few months which would be GDP negative though the immediate reaction in the forex markets is that of Rupee strength – most likely on the premise that uncovered black money would result in increased tax revenues

      Like

    1. It’s pretty stable at 48 for the past 2 weeks or so. There are rumours that India might go a war with Pakistan in coming days and the US election is also around the corner. Those events should allow for INR depreciation which would impact SGD INR also

      Like

  82. I personally think SGDINR has bottomed out. INR has higher chances of depreciation from here than appreciation. Already from a 3 year view INR has given bumper returns. INR has all the positives built into it now and it is the best time if you were waiting to repatriate from India.

    This news has indication that RBI may prefer some depreciation, especially with most global currencies significantly falling vs INR. Ask UK NRIs how they are feeling.

    http://m.economictimes.com/news/economy/finance/10-billion-unhedged-gap-in-foreign-exchange-deposit-redemptions-may-put-rupee-under-pressure/articleshow/54886360.cms

    Like

    1. Well anonymous, if you read the writeup carefully for SGD INR to hit 55 usd INR has to move to 75 and as I have said before do identify yourself when asking questions.

      Like

  83. I think INR has been the best performing currency in the entire world over the last 3 years, when you take into account risk free returns from FD! USD is at the same place level as it was 3 yrs back against INR. SGD has fallen a lot. EUR has fallen a lot lot. GBP has fallen a lot lot lot lot lot… 🙂

    Like

  84. Will SGD bounce back.. would it be steady or steep or going to fall further.. INR on the other hand is on a fictual high.. is it like to drop and how do you see at the exchange rate for the rest of the year

    Like

  85. Hi Aditya,
    I am on a short visit here from Bangalore,to support my daughter (41). She has been a house-wife through out her married life of 20 yrs,all spent in Singapore. Unfortunately, she has lost her husband in a fatal road accident on PIE on 30th Dec’15 and is keen to stabilise herself here and continue to educate her 2 sons (15y & 6y). Financially,both in India and Singapore ,she is comfortable ,but financial awareness and planning for future is a concern.After going through the issues being discussed in your blog,I thought many concerns are relevant to her planning. It will be nice and more practical to meet you and be guided rather than trying to explain on a blog.Please let me know whether this is possible.Many thanks and regards.Commander Rao (retd).

    Like

    1. Hi Mr. Rao,

      Very sorry to hear about the unfortunate accident. Happy to help your daughter with the planning.

      Regards

      Like

  86. With the FED interest rate likely in Dec. . What do you see as a ripple effect over the next few months starting now on SGD to INR rate. .

    Like

    1. If fed does increase rate then INR should see a greater impact as compared to SGD. SGD has already started to trend lower with flurry of expectation management news from the govt. INR is still not pricing the increase in oil prices, reducing Indian rates, potential increase of Fed rates and above all increasing bad debts of banks that can cause serious issues in the banking industry.

      Like

  87. Looking at last couple of days SGD to inr trend is towards depreciation, will same continue ? When do we expect appreciation in the SGD to inr rate , Towards 50-51 mark.

    Like

    1. No instrument – shares, bonds, foreign currency moves in one direction. There are bound to be ups and downs. To answer your question the pair will fluctuate around the 49 mark – 1 rupee up or down based on the news flows.
      If India and Pakistan go in a war sgd INR will hit 50 very quickly. It’s all news flow and event dependent.

      Like

    1. Thanks for the range ,Is it for October month only ? And what do you feel about SGD to INR is will it go to higher side (52) or the other side in this month

      Like

  88. Hello , I am not that technical guy to understand fed rate , election impact , I just wanted to know how is SGD to inr future. Means if you can predict monthly roughly low and high of the upcoming months it will be easy for me to understand.

    Like

  89. BTW, I am considering punting on gold. I have stopped transferring to India since last month. I am considering opening a UOB gold savings account which is basically paper gold and invest in gold like 3k every month. With central bank money printing, people will eventually lose faith in them and gold can atleast go up to it previous USD peak.

    Like

  90. I agree with Aditya, leaving 100s of ks idle in Singapore bank account is not very wise. OCBC 360 account gives the higher interest only for 60k and not beyond it. Depending on your risk appetite you should invest invest in a diversified portfolio of bond funds, equity funds and gold.

    You can look at fundsupermart, it is a good platform for investing into global funds.

    But now may not be a right time to invest in one go. Both bonds and equities are in a bubble. So if you have to go for bonds, go for very short tenures. UOB has a good SGD bond fund that has given consistently 2-3% of safe returns. You can then do SIP into equity funds or wait for some correction to buy.

    Like

  91. Hi Aditya,

    Thanks for this blog, your input are very accurate and reliable.

    For last two years I haven’t transferred any SGD and now I feel that it’s mistake I have done, I could have easily gained 8-9% tax free income instead of settling on 2.5% of OCBC 360 account.

    However I was targeting to transferring once it reach 49 with DBS Remit, which am not seeing happening in near as for last one week it’s going down.

    Would you suggest its still worth keeping 100s of Ks here in wait for currency appreciation?

    Thanks
    Deep

    Like

    1. Hi Deep,

      Transferring money or not is not just a function of market rate but is also about amount, how it will be invested in India, will it need to be repatriated back etc.

      Also I don’t believe is being fixated at a specific rate and have always recommended to average out the rate when transferring. As with any financial instrument it’s impossible to catch the top and the bottom.

      One of the biggest news as of this morning is expected OPEC oil production cut which should boost oil price also the fed rate is a looming threat though I don’t see that happening before US elections. On Singapore front there is a news article which talks about slowing economy and India still has economic headwinds.

      Last I transferred money was for Tax free bonds and am now holding on for a rate over 50 but then again I am well diversified in various asset classes and what works for me might not work for you.

      Cheers

      Liked by 1 person

  92. I was thinking to transfer when rate is good and make an FD in India till the time I am in Singapore . Roughly I will have 10-15k SGD, there is no such hurry to transfer money . If it is going to give me good transfer rate in 1 or 2 months then I don’t have any problem to hold money. Please suggest what you feel.

    Like

    1. Current rate is around 49 and an FD in India would give you roughly 7% ~ 29paisa per month in interest. If you are earning 3-4% interest on this money Singapore the differential almost halves.
      Your risk is anywhere between 45paisa to 90 paisa in interest earnings over a period of 3 months if the exchange rate stays put.
      I think you can wait for 2/3 weeks and then decide on remittance.

      Like

  93. Then should I hold my SGD and wait for the hike ? But the thing is how long I will have to hold SGD for better returns . Any thoughts on this , somewhere in your blog I read SGD would be around 52 , are there any chances of crossing 50 in upcoming days/months.

    Like

    1. Waiting or not is your decision – how is your money invested in Singapore, why do you want to transfer money to India and what will you do with it there.

      I do expect SGD INR to touch 52 by year end but a lot depends on the fed decision. There are news articles where Finance Minstry is was considering devaluation of rupee. So logically USD INR should be 70 or more but there are political factors that will decide the move

      Like

  94. Hi Aaditya ,
    what is expected rate of SGD to INR in sep and upcoming months Oct ,Nov ? I. Want to convert SGD to INR . What will be best time to convert ?

    Like

    1. Hi Piyush

      The rate direction will depend on the fed rate hike meeting in next few days.
      If fed hikes the rate SGD INR will weaken and could go to 47-47.5 in the short run but will bounce back again.

      If there is no hike then I expect rate the stay firmly around 49.5 mark

      Like

  95. http://www.businesstimes.com.sg/government-economy/india-growth-slows-sharply-to-71-in-april-june-quarter

    The key for me was

    “India’s GDP figures have puzzled many economists, who find them hard to square with other indicators such as industrial output or bank lending which show more sluggish activity on the ground.

    Shilan Shah, India economist at Capital Economics, wrote in a note Wednesday that the figures “continue to overstate the strength of the economy“, suggesting growth is on a par with “boom years between 2006 and 2011”.

    “This is scarcely believable, particularly when we try to align the GDP data with other indicators of activity,” Mr Shah wrote.”

    Like

    1. The method of calculation was changed. It may be true that according to the old method, GDP growth is probably much lower. But then you must look on a global scale rather than relatively on Indian scale. The gdp calculation method across the world is even worse from what I know. So relatively Indian is doing better.5% or 7% are just numbers. It appears there was a bumper crop in pulses and prices will crash and inflation too will crash. Rates will be cut and markets will boom. I am super positive on India 🙂

      Like

  96. Hello, is it advisable to take personal loan in singapore and pay off home loan in India? What are the rates for personal loans in singapore?

    Like

    1. Hi,

      You should call the banks and try to figure out the rate that they would offer you, each person’s credit profile is different and one might get a loan for as little as 2% or as high 7%.

      So depending on the interest rate that you can avail here and any early payment charges that you may have in India the answer can be yes its advisable or no its not

      Cheers

      Like

    1. @Dj: Well, my prediction is different from Aditya’s. Based on forex, taking past history and all other factors into consideration, I believe SGD in current downtrend; with few highs in between; will touch 46.974. After some correction upwards it will again fall; this time to 45.815. After an uptrend spree again, it will fall to 43.496. Before a currency breaks-out in an upward trend it must retrace / go back; to gain momentum for the upward push. So, the lower it falls, the higher it goes up. I do agree with Aditya that the exchange rate will touch 55; but infact after the said downtrends, I believe it will go higher, maybe around 62. When that will happen cannot say. However, I do not think it will be a kneejerk reaction alone. I believe it will happen bcoz Indian economy will start doing well in few years time. Yet, Singapore economy will do better.

      Like

    2. Your prediction looks like is based on charts. On initial read I thought you are looking at fibonacci retracements but then the price points sound more like based on Elliot waves.
      In any case 43.50 is not gonna happen for atleast 3 years – that is a movement of roughly 13% from the current rate.

      One would ask why? Because gst will start getting implemented in 6 months time. Any country that has implemented gst has experienced a broader economic issues and it takes around 18 months for things to fall in place before benefits start to appear.

      As these benefits from gst will start to appear the country will be getting ready for general elections as Mr. Modi’s term comes to the 5 year mark.

      So unless something drastic (political turmoil, war, natural calamity, black Swan economic event) happens SGD INR is not going to fall no matter what charts say.
      It can at best remain volatile but a one way secular downward trend is not going to happen.

      Like

    3. Its extremely unlikely to go anywhere near 47 by 3rd week of Sep., 48 on the other hand is possible if fed increases rates. First indication would be employment report on coming friday

      Like

    1. Thanks nitin829. The least of worry is the sale part. Anything purchased 20 years back is prime property now. Even if sold at half of market value, there is gain only and nothing to lose. But that holds true in terms of Indian market value. The bigger worry is the exchange rate. Most investment was made when exchange rate of 1SGD was 22 to 27INR. But now it is a huge loss to convert back into SGD. India is not investment friendly!

      Like

  97. @nitin829: Thanks for the reply. Am settled here for good. Hence, no point keeping money in India. Just looking for an opportune time to transfer money to Singapore. But looking at current exchange rate, am worried and wary. Hence, want to know when INR will get strong and give better SGD yield?

    Like

    1. In that case, I agree with Aditya, you must first sell your flat. From what I understand property market in India is very tough right now. So you must concentrate on selling your flat for a reasonable price and after that take a call depending on what FD rates are and what the exchange rate is. Things change very fast so you still have some time to go before you sell your flat.

      Like

  98. Excellent blog Aditya. Just curious, when is the best time to convert INR to SGD in the coming days / few years. Wanted to sell my flat in India and bring some money here. Wonder if that’s a good thing to do. Anyways, keen to know your prediction, when INR will get strong and give better SGD yield?

    Like

    1. I think your decision depends on what you want to do with the money and how long you want to live in Singapore. If you are risk averse and consider INR as your base currency and want to retire in India, it is better to keep the money in India in NRE FD. If you are willing to take risks and have a long term vision of living in Singapore and want to invest in a global assets classes, then it is better to bring your money to Singapore. There is no capital gains tax in Singapore. In India you can only invest tax free in Indian equities and you need to hold them for 1 Yr minimum. From Singapore you can buy gold, reits, global equities, comodities, bonds etc and not pay any capital gains tax.

      In my case, I prefer to keep my money in India as I dont know how long I will stay in SIngapore and I am quite risk averse and also I invest in Indian equities as I know them better. My current asset allocation is 80% in NRE FDs and debt MFs in India and 20% in Indian equity MFs.
      So far I have done quite well, thanks to the awesome savings power of Singapore because of its low taxes 🙂

      Like

    2. I do not have faith in the Indian currency or in the Indian economy. No matter how little, prefer to save those pennies here.

      Like

    3. I would not completely write off the Indian economy or the currency. I do agree that the hype around India story is more than the ground realities but there is no denying that with a large demographic base and youngish population there are opportunities to be exploited.
      Singapore owing to its small size is much more susceptible to any shock but the governance/government here is top notch which plans for all contingencies and anticipates issues before they arise.

      The key word with any investment strategy is diversification. So if I were you I would not invest all my money either in Singapore or in India.

      Liked by 1 person

    4. Hi SG,

      Thanks for your kind words. In today’s extremely volatile global scenario taking a year or longer view is just pure speculation or wishful thinking.

      From a short term perspective I don’t see any new positives for Indian Rupee that are not already priced in the current rate. One of the key things that’s out there is the Fed interest rate hike and possible lowering of interest rates in India. Both of which I consider as Rupee negative.

      With a fed rate hike SGD will react quicker (weaken) as its not as tightly managed as the Indian Rupee. Which means SGD INR will fall as a knee Jerk reaction.

      Coming to your specific question you should first sell your flat before timing the repatriation. Selling a flat and getting the proceeds could atleast 3 months. From what I know the rental yields in India are around 5% and a Bank FD gives you a better rate so selling the flat and parking the money in FD or a high yield bank deposit would be the first step.

      There should be a possibility in 3rd week of September where SGD INR touches 47.5 – 48.0 if fed decides to hike. However after the fed hike Rupee should gradually fall against USD and SGD as RBI manages the curve.

      Cheers

      Liked by 1 person

    5. Many thanks Aditya. Would you consider Richard Jerram’s prediction correct? That one hike should be expected in December, followed by two to three more next year?

      Like

    6. I don’t know who Richard Jerram is but I would expect a hike in September. If fed does not it would be another lost opportunity like the 2013/2014 when fed should have hiked the rates but then again that’s my personal view looking at the macro economic factors.

      Will there be 2 or 3 more hikes in 2017 will depend on how the world economy performs.

      Like

    7. Many thanks Aditya. Jerram is Bank of Singapore’s chief economist. Opinion is quite divided on when the hike will happen, Sep or Dec. So, it’s all very confusing. I just have to keep the monies ready to transfer when possible.

      Like

  99. Hi Aditya,
    Why SGD getting week against INR.
    comming days, how it will be the Sgd to Inr atmosphere?
    Thank you very much ….
    Srinivas

    Like

    1. Hi Srinivas,

      You cannot expect SGD INR to move only in one direction. The Fed has indicated a rate hike in September and SGD as usual has reacted much more quickly as compared to INR. INR will slowly decline taking queue from the global markets. I expect SGD INR to fluctuate around the 49.50 mark in coming weeks.

      Thanks

      Like

  100. Bloomberg – Singapore’s Export Decline Deepens Again; Local Dollar Falls http://bloom.bg/2blDhNO

    I think it is a good time to now diversify away from SGD atleast to USD. USD has fallen a lot and market is not pricing in an Fed hike. 1.34 is way too high for SGD under current circumstances.

    Like

    1. USD currency value is not backed by US gold reserves. China is acquiring gold for that purpose. Eventually, USD will fall, Chinese Yuan / Renminbi will dominate markets. SGD will then gain. In long term, SGD is better placed than USD. Keen to know Aditya’s views on this.

      Like

    2. First of all I don’t buy into the whole gold backed currency theory. Gold on its own is a useless metal. I mean if crisis comes you can’t eat gold nor gold can cure illness – for the 2 you need food and medicine.

      So I don’t think we are going away from paper based currency anytime soon and any country which has adequate food, medicine and arms to defend their food piles and medicine stores should be the one whose currency is a strong one 🙂

      Liked by 1 person

  101. Hi Aditya,

    When FIIs put in money in the country, if RBI doesn’t do OMO and sterilization, then rupee should naturally appreciate. Have a look at how Taiwan dollar has appreciated along with other EM currencies. RBI has been on this drive to accumulate reserves instead of just selling those dollars that come from fii. You know when RBI needs the currency to rise, it sells dollars.

    Anyways I am not an economist to explain the details. I just read a lot of these stuff due to interest in it.

    RBI has accumulated reserves proactively under Rajan to prevent massive swings unlike previous governor. Considering the way oil prices have fallen in the last 1.5 years and its positive effect on CAD, Rupee should have regained much of its losses of 2013. But this accumulation of reserves and the drive to make exports competitive has kept rupee weak.

    The positive effect of this is that when there is a crisis RBI will intervene and Rupee will not crash. Same can’t be said about SGD.

    Cheers

    Like

    1. The fundamental mistake people make in analysing the Rupee movement is that they consider the fall of 2013 out of line with Rupee fundamentals. Looking at purchasing power parity and other economic parameters the Rupee is still overvalued by appx. 10% and the RBI has tried to instill stability and predictability in the market by OMO. Having reserves allows RBI to step in and smoothen the curve if economic parameters turn worse.
      The employment situation in India is getting from bad to worse… There was a news piece yesterday whereby 600,000 people, including graduates, applied for 3000 cleaner jobs in Kanpur. The slow down in remittances from middle east from foreign workers is also a big impact to their families. If these people are forced to return back to India then not only do inward remittances die down but they also add to the unemployed pool of Indians.
      So fundamentally Indian economy is not in that fantastic a shape which would warrant a strong currency. We still run a deficit economy unlike Singapore which runs a surplus economy and can afford a strong currency.

      Like

    1. All countries/central banks do OMO to keep the currency stable or within a target range. Moreover article does not say that RBI is actively preventing from rupee to appreciate it gives a DBS economists view that “… It has also been intervening in the markets thereby absorbing short term inflows and keeping Rupee in sync with regional movements”

      There is no official statement from RBI that would suggest that they are preventing the currency from rising and this article is based on the views from an economist from DBS.

      I am very interested in knowing the reasons why Indian rupee should rise other than forex inflows. Forex inflows are transient in nature and FII opportunist, they can pull out money from a country just as quickly as they put it in.

      Cheers

      Like

  102. http://sbr.com.sg/economy/news/daily-briefing-singapore-cuts-gdp-forecast-swiber-troubles-show-urgency

    Singapore GDP forecast cut. Singapore is more closely tied to China than India. SGD currently is massively overvalued, mainly due to safe haven flows. It should have fallen considered MAS has changed to a neutral policy. But haven flows are keeping it overvalued. INR on the other hand should have shot up massively, but RBI is accumulating reserves to prepare for the FCNR outflows. My gut feel is that FCNR event has been given too much of importance and won’t have an impact. INR will probably remain at current level. SGD will crash to 1.4 atleast, to the USD. This is purely my take and my current currency positioning has been based on this. I don’t keep more than 2 months savings in SGD. But do your own due diligence, don’t take my advice on face value.

    Cheers!

    Like

    1. Why should have INR shot up massively? And RBI is not actively accumulating reserves… FII are pouring investments while chasing yield.

      Like

  103. Hi Nitin,

    This is precisely what I have done over the last year. But would eventually need to get that money back in Singapore. Thanks for your advise; flip side inr has only slipped south over last year. Anyways comforting to know that you would have done the same.

    Cheers,
    Ankit

    Like

    1. And the probability of it slipping further south is high… Chinese currency is overvalued by 20 to 30% according to some reports and for Make in India to be remotely successful the Chinese competition has to be neutralized. Depending on who the new RBI governor would be we might see quick rate cuts to improve credit off take which would result in INR weakness.
      Ideally rupee should be 75 against the USD but will the govt let it happen is a question only time will answer.

      Like

  104. Hi Ankieth,

    You can keep your India funds in NRE deposit earning 7.5-8%. Why would you need money in Singapore? If it is for down payment to buy a house, you can take personal loan, the interest rate is lesser than 7.5%. There arent too many reasons to keep money in SGD.

    Cheers!

    Like

  105. Thanks for your prompt response. How about early to mid 2017 once the gst kicks in & perhaps considering that US would have raised interest rates by then?

    Like

    1. Trying to forecast a rate 1 year in advance is nothing short of speculation. If US raises rates then both SGD and INR would fall against USD which will keep SGD INR flat. However if rates in India go down then that would be rupee negative and Rupee would fall against USD and SGD. The only rupee positive would be if the GDP numbers, exports and fiscal deficit number improve and in that case rupee would strengthen against most currencies.

      Like

  106. Hi Aditya,

    Do you see rupee strengthening against sgd in this 2016 after the FCNR redemeptions settle by Nov this. By when can I expect the rupee to show some strength against sgd? I have been waiting to redeem money from India. If so what levels can I expect? Thanks

    Like

    1. Hi Ankieth,

      I don’t expect INR to strengthen against SGD in 2016, SGD INR may go down to 48 on a odd day but I would be looking at the pair to touch 51-52 in upcoming months.

      Thanks

      Like

  107. Hi Aditya,
    If the GST bill get passed in this session….
    Sgd to Inr conversion will go down?
    How long it will take to go down from 49-50.
    Thank you
    Regards,
    Srinivas

    Like

    1. Hi Srinivas,

      GST bill passage will be positive for the Rupee against the USD but SGD INR conversion also depends on the SGD rate against USD. With US fed not giving any clear indications of rate rise SGD will also strengthen against the USD. Overall I dont see INR strengthening dramatically against the SGD in the coming weeks and should stay around the 49 mark.
      Thanks

      Like

  108. Hi Aditya,
    Am following your blog and views closely.I am back in India for good and want to transfer all my earnings in SGD to INR now.Do you suggest to wait till Aug Sept? Bit worried looking at the drop in sgd-inr rates since even 0.5/1.0 drop in rupee will mean a huge difference for me.

    Like

    1. Hi Kavita,

      To wait or convert now is your decision.

      I expect the Rupee to fall due to 20 billion payments due in Aug / Sep time frame however if the GST bill does get passed in this monsoon session it will be positive for Rupee. Also the next RBI governor is due to be appointed in Sep.

      At 50 Sgd INR is fairly valued and a range of 49 to 51 is in order for next few weeks.

      And if even a small movement has a big impact for you then you could transfer in small chunks to average out the rates.

      Thanks.

      Like

    1. Hi Srinivas,

      50 is a fair value for SGD INR for now but I expect it to touch 52 53 towards end Aug Sep time frame

      Like

  109. Hi Aditya, what is your outlook now for next couple of month. Is it still intact as per your blog. 🙂

    Regards
    Sushant

    Like

    1. Hi Sushant,

      50 is a fair value for SGD INR for now but I expect it to touch 52 53 towards Aug Sep time frame

      Like

    1. Hi PA,

      If you want to speculate sure go ahead and buy, it fell all the way to 1.33 against the USD and is now at 1.36…it will be a risky proposition to just buy and hold the currency. However if you want to buy property or stocks in UK that’s different.

      Though I will stay away from stocks for 2 weeks till dust settles

      Thanks

      Like

    2. Btw the cash rates being offered are not conducive for Gbp against sgd… Dbs is 1.89 and money changers 1.95, interbank rate is 1.84. So unless you have a forex trading account buying gbp against sgd in cash market is not a good idea.

      Like

  110. Hi Aditya

    Now the referendum results declared that GB will leave from Europe union. Because of it SGD to INR drops almost 0.70% today. How about your prediction on SGD to INR for upcoming few months?

    Like

    1. SGD always reacts quicker than INR so over next few days I expect SGD INR to start a move to 52 if nothing else changes

      Like

  111. Now with 95% votes to leave, all Asian markets are affected. Korea and Japan especially. Not sure if SGD INR pair will strengthen as all currencies are affected.

    Like

    1. In short run, Sgd Inr will weaken, INR volatility is managed by the RBI… SGD however trades a lot more freely

      Like

  112. Dear Aditya,

    I am planning to tranfer money to India by next week. Pls advise can i get a rate of 51 within one week.

    Thanks Rajesh

    Like

    1. Hi Rajesh,

      It will all depend on what happens in the Britain referendum today. If Britain decides to leave EU then Rupee should be 52/53 tomorrow itself… If Britain decides to stay then SGD INR might retrace back to 49 level.
      Thanks

      Like

    2. There is a real chance of brexit looking at the results… If that happens sgd INR will strengthen in the short term

      Like

  113. Surprised to see 50 after very Long time, thanks for the update aditya, wanted to know I have home loan in India with 9.60% interest.

    What do you suggest of taking loan from SG at this rate and paying some loan?

    Also is this right time to do so or it will appreciate more?

    What do you think is better for loan, balance transfer or some there type of loan in SG?

    Like

    1. Getting a 6 month loan in Singapore around 2.2 % is possible and I would take that and pay off a high interest loan in India. I do expect Rupee to move towards 52 in next 2 months depending on the global events but in any case now will be a good time to reduce some of that loan.

      Liked by 1 person

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