As the World Bank announced that it downgraded India’s growth forecast, the GBP INR exchange rate rallied from a two-month low overnight on Wednesday.
Demonetisation Continues Negatively Impacting Indian Rupee (INR)
The Pound (GBP) Indian Rupee (INR) exchange rate surged yesterday evening as India’s growth forecast was revised down by the World Bank, a move which weighed on the Indian currency. The Bank lowered its expectations for growth from 7.6% to 7% in the 2016-17 financial year.
The World Bank points to the government’s decision to demonetise over 80% of the nation’s notes, with the overnight removal of the 1000 and 500 Rupee notes as the main deciding factor behind the downgrade. As a largely cash based society, the demonetisation of the two most widely circulated notes has caused widespread chaos in the emerging economy, with the lack of availability of the replacement bills grinding parts of the economy to a standstill.
However, the World Bank said the negative impact of demonetisation was likely to only effect the economy in the short-term as it forecasts the economy will see growth accelerate from the 2018-19 financial year onwards.
Pound (GBP) Strengthened by Rise in UK Production
The Pound’s gains on Wednesday were supported by some impressive British data as the latest UK production stats for the Manufacturing, Construction and Industrial sectors all reported notable growth.
The UK’s industrial sector in particular showed remarkable growth as it skyrocketed from -1.1% to 2.1% in November, greatly outpacing predictions of 0.8% growth and reaching its best levels since April.
However there are concerns that the unseasonably mild weather in December could see the UK’s industrial sector plummet once again and energy and fuel consumption is likely to have dropped.
GBP INR Exchange Rate Forecast: Indian Production Data Ahead
The GBP INR exchange rate may begin to decline again later today following the release of India’s own Industrial Production data, which is expect to report that production rallied from -1.9% to 1.3% in November.
Meanwhile a lull in UK data until next week is likely to hinder the Pound’s gains as investors are left to focus on ‘Brexit’ on the UK economy, with the government’s reluctance to publish its plans for leaving the EU likely to negatively impact Sterling sentiment as March and the triggering of Article 50 rapidly approaches.
Current Interbank Exchange Rates
At the time of writing the GBP INR exchange rate was trending around 83.46 and the INR GBP exchange rate was trending around 0.01.
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