British inflation data on Tuesday suggests that the hopes for an earlier-than-anticipated Bank of England rate hike is now optimistic to the point of foolishness. The Pound to Indian Rupee exchange rate has plummeted as a result, despite an absence of Indian economic data on Tuesday.
The Pound Sterling to Indian Rupee exchange rate is currently trending in the region of 98.8640.
With the weight of the Scottish bid for independence riding on Sterling’s shoulders, the British currency has struggled against the volatility of uncertainty. With several polls giving different results it has become harder to gauge the probability of a divided Britain, and so Sterling has plummeted as the result of trader risk aversion.
The Indian Rupee battled against a mixed set of economic data publications which saw the Indian currency fluctuate against many of its major competitors. The yearly inflation was expected to soften from 5.19% to 5% in August, but the actual result showed a heavy decline to 3.74%. Given that the Reserve Bank of India has set an inflation target of 6% the decline was bad news for Indian economic standing.
Indian trade balance, however, proved to be positive having narrowed the most in almost a year. The trade shortfall decreased to 10.8 billion on the back of lower oil prices which reduced import prices.
The Pound Sterling to Indian Rupee exchange rate has hit a low today of 98.7240.
Tuesday’s British economic data has aided the Pound’s downtrend. Although the Consumer Price Index met with the market consensus of a slight decline from 1.6% to 1.5%; the fact that it has fallen spells bad news for the British economy given that the Bank of England has set an inflation target of 2.0%. This essentially snubs out any hope of a near-future rate hike and hardened stance on monetary policy. Those invested in the Pound will be a little buoyed by the Core Consumer Price Index however, as it exceeded expectations that it would fall in line with the previous figure of 1.8%; with the actual data reaching 1.9%.
With nothing in terms of Indian domestic data on Tuesday the Indian Rupee is subject to movement from foreign currency changes, particularly Asian currencies as Anindya Banerjee, a currency analyst at Kotak Securities, a brokerage in Mumbai stated; ‘We are seeing some kind of convergence between the Rupee and other falling Asian currencies considering that the Rupee has been an outlier in this space so far’.
With investors reluctant to invest heavily in the US Dollar ahead of the much anticipated Federal Reserve rate decision; the Rupee has enjoyed slight gains against some of its rivals.
The Pound Sterling to Indian Rupee exchange rate has reached a high today of 99.3818.
UPDATE
The Pound Sterling to Indian Rupee exchange rate is currently trending in the region of 99.5040.
With the Bank of England minutes from their most recent policy meeting due for publication on Wednesday morning traders have held off investing in Sterling. Ordinarily, given that the meeting didn’t contain any great change to monetary policy, traders would be less fearful of the risk. However, coupled with anxieties over the Scottish bid for independence, it is hardly surprising that traders are cautious when it comes to Sterling.
With nothing in terms of Indian domestic data on Wednesday the Indian Rupee is subject to change from foreign currency movement. It is likely to experience a slight boost as traders halt investment in the US Dollar before the Federal Reserve make their interest rate decision.
