The Pound (GBP) advanced to its best level in over a week on Monday against the Indian Rupee (INR) as increasing expectations that the US Federal Reserve will soon raise interest rates and end its quantitative easing programme weighed heavily upon emerging market currencies.
Data released last Friday was also weighing upon the Rupee as it showed that the Asian nation is struggling to get inflation under control. Last week’s report showed that Consumer Price Inflation (CPI) was still trending at high levels and is stopping the Indian Central Bank from lowering interest rates.
There was a glimmer of hope however after economic data released on Monday showed that India’s Wholesale Inflation Rate slowed to its lowest level in five years as weak domestic demand combined with falling commodity prices eased pressure upon prices.
According to the Indian Ministry of Commerce and Industry, the wholesale price index increased 3.74% from the previous year in August, a figure that was a steep drop from the preceding months figure of 5.19% and better than the 4.40% expected by economists.
The data had little impact upon the Rupee however as the global markets keep their attention fixed upon the USA and Europe.
Expectations that the Federal Reserve is edging closer to raising interest rates and ending its monthly quantitative easing programme has seen currencies right across Asia and emerging markets take a knock. Those currencies have benefitted from the USA’s QE programme as it has seen an influx of cheap cash into those regions, an ending of the programme and that will no longer be the case.
The Federal Reserve gathers for its September policy meeting on Wednesday.
The Rupee was also being weighed upon by disappointing data out of China. According to the data, factory production increased by just 6.9% on an annual basis last month, the slowest pace recorded since 2009 and was a steep drop from
July’s figure of 9%. Concerns over a slowdown in the world’s second largest economy also weighed upon the Australian (AUD) and New Zealand Dollars (NZD).
Pound Sterling to Indian Rupee exchange rate forecast
The Rupee is forecast to remain under pressure against its major peers until Wednesday when the Federal Reserve holds its policy meeting. If the outcome of the meeting shows a more hawkish stance by Fed policy makers then we cane xpect the Indian currency to fall further as expectations will increase that a rate hike will occur sooner than previously estimated.
Sterling meanwhile could fall by as much as 10% if Scotland votes in favour of independence from the UK. A vote in favour for staying however could send the Pound higher by as much as 3-4%.
Volatility is the name of the game this week.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Indian Rupee,
,US Dollar,0.01637 ,
Indian Rupee,,British Pound,0.01008 ,
Indian Rupee,,Euro,0.0126 ,
Pound Sterling,, Indian Rupee,99.1884 ,
Euro,, Indian Rupee,78.9173 ,
US Dollar,, Indian Rupee,61.068 ,
[/table]
