While it maybe difficult to time any market timing does play an important role and could be the difference between ordinary and stellar returns.
Timing of transferring money to India and investing in NRE Deposits or any other investment vehicle could also mean the difference between a 3% compounded return vs returns of 7% or more.
To illustrate this, I took the money transfers I have done over the past few years and tabulated a return table. I factored in cost of transferring funds i.e. nett money received in India and also the cost of repatriating the money back on maturity and using today’s exchange rate
As you would see the return ranges from anywhere between 3% to 8%, even for transfers which were done not too far apart.
The best returns were achieved when the SGD INR rate was well beyond what fundamentals commanded – like in 2018 the fair value of SGD INR was around 52 and a transfer made at 53.3 generated a superior return
If the exchange rate moved favorably or stayed flat the returns went up. Return matrix using exchange rate of 54
Based on long term interest rate parity, i believe 54.5 -55 is fair value for SGD INR towards the end of 2020. So if the pair crosses 55 and banks are still offering 6% or more NRE FD’s then it would be a good investment to consider.
I would be keen to hear what your experience with generating stable returns in India has been