Stock Market Worries Lower Demand for the Rupee (INR) as Pound (GBP) Climbs Today
With Asian stock markets remaining in turmoil today the Rupee (INR) has begun to weaken as markets become increasing edgy as to the possibility of an oncoming currency war. As trading on the Pound (GBP) is generally upbeat this morning ahead of the UK’s Public Sector Net Borrowing figure the GBP/INR exchange rate is trending strongly at 103.2700.
Earlier…
Lower than forecast UK Retail Sales pushed the GBP/INR exchange rate lower today after the Rupee (INR) saw a boost on dovish minutes from the Federal Open Market Committee (FOMC).
GBP/INR Conversion Rate Climbed on Strength of Increased UK CPI and Interest Rate Hike Hopes
Traders were taken somewhat by surprise on Tuesday when the UK Consumer Price Index came in above forecast to post an increase to 0.1%. As this measure of inflation is considered one of the key pieces of data on which the Monetary Policy Committee (MPC) bases their interest rate decisions, the improvement naturally led to much speculation on the possibility of an earlier hike from the Bank of England (BoE). Paired with the previous hawkish comments of MPC member Kristin Forbes this saw the Pound (GBP) rise dramatically across the board, with the GBP/INR exchange rate surging to a new yearly-high at 102.7241.
The same day also saw the Chinese stock markets begin to nosedive once more, clocking their single largest dip in three weeks, which caused fears of a currency war to reignite. Although the Rupee (INR) remains one of the strongest emerging-market currencies and appeared to suffer less of a knock-on effect that others in the Australasian basket, it could not entirely escape impact.
UK Retail Sales Dented Pound (GBP) Today, Rupee (INR) Saw Rise on Dovish Fed Sentiment
While the problems in China, and now many of the other Asian stock markets, remain on the minds of traders the Rupee was nevertheless buoyed overnight by the Federal Open Market Committee (FOMC) minutes. A more dovish outlook than had been expected for the Fed, with the prospect of a September hike apparently diminished, spurred a number of its rivals to make gains. Initially the GBP/INR exchange rate was dragged down to 101.9439, although it was not long before the pairing returned to a general uptrend.
Pound sentiment has quickly weakened over the last two days, however, as economists denounced the inflation boost as an anomaly that does not accurately reflect the current state of the domestic economy. Predictions of a slump back to 0% next month and the fact that any BoE rate rise remains unlikely to occur before the first quarter of the new year quickly started driving investors away from Sterling. Today’s disappointing Retail Sales data has only compounded these loses, as both the month-on-month and year-on-year numbers fell short of forecast to indicate that concerns over the UK economy could be well founded.
GBP/INR Exchange Rate Forecast: Pound Could Make Further Gains on Lower Deficit
Tomorrow’s UK Public Sector Net Borrowing could bolster the Pound to edge the GBP/INR exchange rate back onto a more bullish run, but if a worse than anticipated deficit materialises it seems likely that there will be further losses.
Domestic data remains thin on the ground for India in the coming days so the Rupee will continue to be driven primarily by regional developments and the ability of the local economy to weather the current global slowdown.
Current GBP, INR Exchange Rates
At time of writing the Pound Sterling to Indian Rupee (GBP/INR) exchange rate has returned to an uptrend at 102.5900, with the Indian Rupee to Pound Sterling (INR/GBP) pairing static at 0.0098.
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