Goldman Sachs closes short THB/INR trade for small gain

Investing.com -- Goldman Sachs closed its short Thai baht against Indian rupee trade recommendation on Monday, recording a gain of just under 1%, driven mostly by accrued carry.

The investment bank initiated the short THB/INR position on June 12, 2026, following the Reserve Bank of India's foreign exchange measures designed to attract capital inflows, with the position funded out of the Thai baht.

The Thai baht remained under pressure during the trade period due to weaker economic fundamentals. Thailand recorded negative real rates in the second quarter as inflation rose on higher energy prices. The country's current account balance deteriorated into deficit territory, driven by higher energy imports and data center-related capital imports.

The Bank of Thailand introduced measures to regulate gold trading, intended to reduce the positive correlation between gold and the Thai baht. Goldman Sachs said these measures helped reduce the correlation, though rising gold prices still present some risk to the magnitude of Thai baht weakness.

The RBI announced that the Foreign Currency Non-Resident Bank swap facility for new deposits will close on August 31, 2026, one month earlier than the previously announced September 30 deadline. Gross FCNR(B) deposits stood at $52.3 billion as of August 13, alongside a further $4.5 billion raised through External Commercial Borrowings and Overseas Foreign Currency Borrowings. Goldman Sachs estimates net FCNR(B) inflows at around $40 billion.

The bank said the RBI's decision likely reflects an assessment that balance of payments stress has eased. Oil prices are now below second quarter levels, net foreign direct investment inflows appear to have improved in the second quarter based on provisional RBI estimates, foreign institutional investor equity inflows have turned positive, and bond inflows since the June policy meeting have been sizeable.

Goldman Sachs expects USD/INR to remain broadly range-bound around 94-96.

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