The Indian Rupee has recorded gains against the Pound (INR/GBP) on Wednesday as the Bank of England (BoE) meeting minutes caused disappointment for many investors. The GBP to INR exchange rate is presently trending in the region of 98.2780.
Bank of England Meeting Minutes Cause Pound Exchange Rate to Soften
The release of Bank of England minutes saw Sterling sink against the majority of other majors on Wednesday as it was revealed no other policymakers had dissented in the vote for interest rate increases. In the last two Monetary Policy Committee (MPC) meetings, two of the nine board members have voted in favour of immediate rate hikes.
Bank of England Governor Mark Carney is firmly placed in the dovish camp when it comes to increasing borrowing costs. However, Carney has suggested that UK rate hikes will be fuelled by positive data.
Carney asserted: ‘We live in a data dependent world. For November we’ll have an updated forecast which will give a sense of how the interplay between changes in financial conditions, where there’s been some movement in exchange rates, some other factors, to what extent they offset weakness abroad and to what extent does the modest deceleration in the UK economy towards the end of this year – to what extent is that likely to come to pass. We have been expecting that. There are some signs of that. We put those together and determine the likely path for inflation.’
Indian Economic Improvement Hindered by Inflation
High inflation has been a problem in India for some time and is an issue that the Government and Reserve Bank of India have been trying to wrangle. Wholesale Prices used to measure Inflation in India fell to nearly a five-year low in September. Recently, the Indian government has also allowed rises in fuel such as diesel and natural gas, rather than continuing to enforce state control.
Moody’s Analytics credit rating agency Vice President Atsi Sheth commented: ‘Implementing reform at a time of low international oil prices reduces the potential for inflationary pressures from a jump in domestic fuel prices. Moreover, petroleum products have a small weight in India’s consumer price basket and we therefore expect energy product price liberalisation to have a benign impact on CPI [Consumer Price Index] inflation.’
Moody’s believes that the timing of the price change has worked well with the price of international crude oil prices falling and therefore allowing lesser inflationary impact than at a time when prices were high. Sheth continued: ‘These steps are credit positive because they allow the Indian market to adjust to global commodity price trends and reduce the exposure of government finances to those trends.’
If inflation in the nation continues to fall, it would allow the RBI to focus on boosting economic growth instead of constantly fighting to tackle prices. However, with oil prices slipping, many economists have noted the positive effect lower commodity costs have had on the economy. Economist Sonal Varma suggested: ‘Overall, lower commodity prices further support our view that India is entering a ‘goldilocks period’ of lower inflation and higher growth.’
Pound to Indian Rupee (GBP/INR) Exchange Rate forecast
Looking ahead, Indian data is thin on the ground over the next few weeks. Friday will see Foreign Reserves figures released, whereas the following Friday (31st October) will see the publication of Indian Deposit Growth, Foreign Reserves and Bank Loan Growth. Monday saw the release of the latest Reserve Bank of India meeting minutes which suggested policymakers had split views on the Indian economy.
The minutes read: ‘Members had divergent views on the global macroeconomic environment. While some members felt that the global macroeconomic situation was better than it was a few months back, some others were of the view that there was no improvement.’
The Pound will continue to be impacted by Wednesday’s meeting minutes whilst Thursday will see UK Retail Sales figures revealed. Friday could see major Sterling movement with Gross Domestic Product (GDP) figures published. At present, economists have forecast a drop from 3.2% to 3.0% on the year in the third quarter.
The INR to GBP exchange rate is presently trading in the region of 0.0101.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Indian Rupee, 98.3850,
US Dollar,,Indian Rupee,61.2150,
Euro,,Indian Rupee,77.6110,
Australian Dollar,,Indian Rupee,54.8530,
New Zealand Dollar,,Indian Rupee,48.7760,
[/table]
