SGD INR 55 Achieved, Target 57

SGD INR finally crossed 55 after appreciating 5% from the exchange rate in Nov 2019 – 52.60. Theoretically speaking you would have gained slightly more by transferring to India but after accounting for the transaction costs it might not have been much.

It stayed below the 55 mark as I had written more than 2 years back SGD INR flirts with 52 could it hit 55. That time i did not think it will cross 55 but now I am updating my SGD INR target to 57, yes you read it right, Fifty Seven!!

By when?

I expect this to be achieved by the end of the year and then the rate should slowly decline back to 54.5 leading upto the Indian Budget in Feb 2021

The rationale being that USD INR will touch 76.5 and USD SGD will move to 1.34 mark in the short run.

Why will INR weaken?

Inflation and rising COVID cases will make it hard for INR to appreciate, the fund flows on account of mega deals that Reliance Industries has been doing should come to an end and at some point the Foreign Institutional investors will book profits and withdraw their gains from the stock markets. RBI will smoothen then currency movements but given the inflation has very little room to tweak the interest rates.

Why would SGD strengthen?

Singapore is one of the last few countries that offer a positive interest rates on government securities and is politically stable unlike US or parts of Europe. This gives SGD bonds safe haven status and money comes in. The same thing happened in 2009-2012 when SGD rose to as high as 1.22 against the USD.

Does this only benefit SGD INR?

Next 6 weeks should provide opportunity across currencies – EUR INR could see 90, GBP INR 99 and USD INR – 76.5. So those looking to transfer can watch out for these levels.

Instead of waiting for absolute levels, I would plan for any transfers based on what is your end goal. If you are getting a high interest rate in NRE FD’s or other investments now then even current rate of 55.4 is a good rate. Each of us have different goals, tax status and risk tolerances. Therefore plan based on your needs and not get stuck at specific levels.

There are other options if you do not want to transfer the money to India and yet want to gain with the short term increase in rates, watch out for the next post.

12 thoughts on “SGD INR 55 Achieved, Target 57”

    1. It might languish like this for a few more days. Last week of Jan is when it should move again. If you are targeting 55.50 then now or 3 weeks later would make no difference, your earnings at 6% in a month will cover the 25-30p difference

      Liked by 1 person

  1. I have another 50k to send to India. But I will wait for SGDINR to go to 56. Meanwhile I am trying to maximise yield on that by deploying in SingLife, EasyEarn, Gigantic and Syfe Cash+. Not easy to manage liquid cash in Singapore and earn yield on it. 🙂

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  2. Hi Aditya,

    The rupee does look like it will fall further. I have some 50k that I took as SGD margin loan against my ETF at cheap 1.5% interest, I am planning to go ahead and remit to India and book NRE FD for 6.5% with Indusind bank. Any thoughts?

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    1. Hi Nitin,

      Your breakeven point will be 5% rupee depreciation from the current levels ignoring any transfer costs. So assuming rupee does go to 57 over the next one year your gain maybe around 2% post the cost funds and currency depreciation. There are better avenues to earn that much by keeping money in Singapore. Any Emerging Market ETF / MF will yield more. I am suggesting a etf as this would be a leveraged transaction but if it is in line with your overall portfolio risk goal then it’s a reasonable bet

      Liked by 1 person

    2. Thanks Aditya, my plan was to invest in some Roboadvisors like Syfe and Stashaway. Infact I had opened accounts with both of them. But looking at the way markets have shot up and US interest rates are also creeping up, so it looks like most markets are now fully valued and that is why I stepped away from investing into markets anymore. I still have STI ETF which I am planning to hold until STI crosses 3000-3200.

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    3. I agree that markets are fully valued and ideally should correct. The current euphoria is beyond explanation. An approach could be to wait and watch for a month, at the most you loose a month’s interest which could be made up by currency movement. I am thinking the rupee will weaken nearing budget which is on 1st Feb

      Liked by 1 person

    4. I yesterday had taken out a margin loan of 50k from interactive brokers against my STI ETF, but today watching the ETF go to 3, I decided to sell it. So, now it no more a loan, I got out of it.

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    5. I went ahead and transferred 50k via singx. They have a promo going on. Enter promo code FIFTYOFF and they charge you half the fee. I got net after fees 55.21 rate. I am going to put it in IndusInd 1yr FD at 6.5%

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    1. Even if it’s not 57, I think 56.5 is very possible. I don’t expect the rate to stick for long though. I think the new support would be 54 and any movements towards 57 are great opportunities to invest in Indian markets

      Liked by 1 person

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