SGD INR: Rollercoaster First few months of 2021

Just yesterday, one of my friends mentioned going to universal studios and experiencing the rollercoasters and that reminded me of movements in SGD INR in the past few months. I said, you can experience a roller coaster just by trying to time remittances from from Singapore to India

Having started the year at 55.25 the pair saw lows of 53.80 by March and sharply reversed back to 55.75 in first week of April. That is a move of approximately 3% down and back up within 3 months which is unusual in the currency markets.

I had expected the pair to drop to 57 SGD INR 55 achieved, Target 57 last year but with RBI intervening in the forex markets and India’s better than expected figures of containing covid resulted in short term strength.

The rupee moved sharply lower after the RBI MPC meeting though there was nothing in the meeting that would warrant such a move. So what has caused such volatility in SGD INR?

Covid Connection?

With Covid cases rising sharply over the last month the fear of economic recovery being derailed is high. One could attribute this move to Covid – however, if you look at exchange rate in September 2020, when India experienced the peak of first wave, the exchange rate was between 53.5 – 54. So I don’t think its covid anymore at play here.

Correlation to Indian Bond yields?

Similarly the Indian G-sec Bond yields have fluctuated between 5.8 to 6.20% in the past three months and seem unlikely to have caused this move. Moreover, with a large borrowing agenda in 2021, RBI would do everything in its power to keep the yields stable / low thereby containing the cost of funding for the government. So I don’t think the expectation of increasing yields would have caused this move.

Falling Oil Prices?

Brent Crude traded close to 70$ in early march and has fallen back towards the 60$ mark in April. India imports almost 80% of its oil which is traded in USD. Having a strong rupee when oil prices are high and letting them fall a little as oil goes lower can help the cost of oil in rupees stable. I believe that this could be a small factor in RBI allowing the rupee to correctly sharply lower and I would watch the oil prices over the next few months to get a sense of where INR may be headed. However, I don’t think this was the real reason.

RBI reducing intervention in the forex markets?

This I believe is the real reason behind the rupees move lower. There was a very low risk carry trade in the market whereby an institution with access to dollar market would borrow in dollars and invest in rupee bonds thereby having an arbitrage of anywhere between 1-3%. The belief was that RBI would intervene and keep currency anchored around the 73 mark against the USD. RBI may have decided to purge such trades by either mopping up dollars temporarily or not intervening in the forex markets.

I am not saying that RBI is manipulating the currency but tri agenda of subtly boosting exports, lower oil prices cushioning the cost of outflow and objective of flushing out traders with one way bets might have resulted in the sharp moves recently.

What to expect over next 3 months?

I think that 55 is now the new base rate with fluctuations of Rs 1.5 on both sides of the mean.

With MAS scheduled to release monetary policy data sometime in April, SGD INR could touch 57 in a knee jerk reaction or fall back to 54 in a quick move. There are analyst reports that suggest that with economy still not open to tourists SGD may continue to remain weak against the US Dollar. However, with housing prices inching up I don’t think MAS would want a weak dollar which would make Singapore properties cheaper for foreigners.

In a nutshell, I expect the roller coaster ride to continue and would take any move above 56.25 to transfer and invest in India. There is still value in some sectors of the equity markets and then there are low risk investments like Bharat Bond which I analysed in the previous post – Bharat Bond Better than NRE FD

45 thoughts on “SGD INR: Rollercoaster First few months of 2021”

  1. MAS tightens the policy band. This can push SGD INR to 57. Read the news on Reuters, excerpt below:

    Singapore’s central bank unexpectedly tightened its monetary policy on Thursday, saying the move will ensure price stability over the medium-term.

    The Monetary Authority of Singapore (MAS) manages monetary policy through exchange rate settings, rather than interest rates, letting the Singapore dollar rise or fall against the currencies of its main trading partners within an undisclosed band.


    The MAS said on Thursday it would raise slightly the slope of the policy band, from zero percent previously. The width of the band and the level at which it is centred will be unchanged, it said.

    “This appreciation path for the S$NEER policy band will ensure price stability over the medium term while recognising the risks to the economic recovery,” the MAS said in its statement. It said core inflation is expected to rise to 1–2% next year, and close to 2% in the medium-term


  2. Hi, Any views on SGD to INR for the next 2 weeks, keeping around 50k to transfer.
    Do you think Diwali is the safe time to transfer sgd?



    1. Hi
      There is chance to get 55.5 over next 2-3 can target that rate. With US debt ceiling drama unfolding volatility is expected.


    2. Hi Aditya

      Rate jumped from 54.30 to 55.75. What is your view for next 2 months? Will it touch 56.5/57 by year end ?

      Thank you


    3. Hi Reddy,
      It’s possible. All would depend on oil price I think and what RBI wants to do about rising yields but 56.5-57 would be a good rate to transfer. Now if a war or some other political event happens the outlook will change



  3. 54.75! wow, imagine you hold a few 100ks of SGD in cash in Singapore, the amount of money you lost in just interest. This is what I have learnt. Developed market fixed income wont give you any yield. You need to take risk. Either in EM fixed income or in EM/DM equities.

    I would suggest look at your assets allocation. How much equities vs bonds you want. The bond component should be in the currency where you will retire. So, if you dont have SG PR and you are never going to get it even, then it makes zero sense to keep SGDs in your bank account. Decide on your asset allocation and move your bond component to India and invest in NRE FDs or bond funds and earn nice 6-7% yield. SGDINR will keep moving up and down but in the long term wont generate any meaningful returns in INR terms if you keep SGD. India is not the same India as in 2013, RBI has accumulated massive reserves so INR will not just fall off a cliff like it used to.

    I keep zero SGD now. Any new money I save, I invest it straight away in ETFs with interactive brokers and most of existing money I have already sent to India.


    1. You are correct Nitin.
      From 56.85 to 54.50 in 3 months. Almost 5% drop. NRE or Managing INR in India seems better option.
      Indian equities running like a dark horse and INR strengthening.


    2. I think if you get around 55, it is better to send money to India rather than keeping SGD cash here and waiting. There are a slew of IPOs lined up in India and RBI has accumulated reserves of 600bn now and prevented rupee from rising. Now with all the inflows coming into India, I feel INR has very low chances of weakening. Also consider all the regulations and tech crackdown in China, there is going to be incremental allocation to India. Even crude oil prices rising doesnt sound like a challenge now in this backdrop.

      So to summarize, either invest your SGD here in ETFs, roboadvisors or unit trusts or just send money to India and invest there in bond funds or slowly keep adding into Nifty index fund. You need to keep investing. Holding cash in SGD is the worst thing to do.


  4. Hi ,

    Want to send 30k India, is this still good time? Seeing downtrend since two weeks.

    Can it reach 55.50 by near august?


    1. Hi

      Markets are unpredictable with political and pandemic risk. It could go to 55.5 or fall down to 54 as well. You can transfer in small tranches to average out your rate.


  5. Hi Aditya
    Any views on SGD — > INR movement for next 2 months. Any reason for sudden strength of INR?
    Thank you


    1. Hi Reddy
      It just might be RBI selling dollars to manage some upcoming outflows. Any strength in rupee should be temporary. If SGD INR goes towarda 54 in a knee jerk reaction then great opportunity to bring money back from India. With Covid cases rising in rest of South East Asia, Singapore and sgd is a safe haven.


    2. I transfered all my SGD to India as this was exactly what I was fearing. In Singapore keeping SGD is always a dilemma, you need to invest it you cannot just keep it. In India, you can keep in NRE FDs, bond funds and make decent gains. In Singapore, if you invest in SGD bond funds you dont make a lot of money and if you retirement plan is in India, you will always be worried about the fx risk. So, I found moving money to India and managing from India perspective is more of a peace of mind for me. But going forward any new SGD I accumulate I am planning to invest through IBKR in global equity ETFs and India money I will invest in India mutual funds systematically.


  6. I think we should just accumulate SGD now, RBI is kind of like trading it up and down to make gains and pass it as dividend to govt. So we should also do the same. Accumulate SGD while SGDINR < 57 and transfer to India once the level gets crossed. I think by year end we should see 57 again.


    1. I agree, nre deposits are not as attractive as they used to be. I think if one can generate 4-5% return in sgd denominated assets it will easily beat the exchange adjusted nre deposit returns. If inflation really comes true then cyclical mutual funds should do well and so do banks. They usually go up when interest rates go up. Even if Japan and EU get to zero rate instead of negative that will be a big boost to banks profitability.

      Liked by 1 person

  7. I just got this email from HDFC “We wish to inform you that our online remittance service through Quickremit for money transfer from Singapore to India will be discontinued after 30th June 2021 due to changes in regulatory guidelines.”

    What regulatory guidelines are they talking about and why only Singapore? I dont use HDFC quickremit, but I was planning to use ICICI Money2India, as they have a new NRI remittance permia account, where you can maintain zero balance account, as long as you remit 10k USD worth in a year.


  8. Looks like RBI has sold more dollar to prop up rupee. I think that a short term top of 56.8 was achieved 2 days back. Unless, covid goes worse in India (which I hope and pray it does not) the pair should settle back between 55.5 – 56


  9. Hi All,

    I found another transfer provider called Remitly which also gives spot rate but the fees seems to be fixed per transfer, which is like $4! 1st transfer is free. But they have limits on how much you can transfer. You can verify by submitting documents and your limit will be increased to 90k per month, without verification it is only 15k per month.


    1. Hi Aditya, they are registered with MAS as well but it is a mainly a global player registered in US and many other places.


    2. Hi Reddy, when I tried to do transfer it showed me the spot rate with no fees for even 20k, so I thought there is no limit of 1k. But I didn’t go through with the transaction. Also I didn’t find any way of locking the transaction. So you maybe right that is the best.


  10. MAS has made no changes to the monetary policy but have increased the inflation forecast slightly. This should result in USD SGD moving to 1.33 and SGD INR inching closer to 56.5. Watch closely if you are looking to transfer money to India


    1. Roller coaster continues… Sharp drop from 56.35 to 55.80 now. Could it really follow the image. Go back to 54 quickly?


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