The Indian Rupee (INR) to Pound Sterling (GBP) exchange rate rallied sharply on Friday after credit rating agency Standard and Poor’s positively revised India’s sovereign rating outlook.
Earlier in the session, the Rupee was trading lower against the Pound and was in the region of a one and a half month low against the US Dollar due to concerns that Indian companies would have to source higher costing coal from overseas after the Indian government put the country’s mines up for sale.
The decision to auction India’s coal mines came after the country’s Supreme Court cancelled 214 out of 218 coalmine permits. The cancellation came after the court deemed the allocation of such permits over the past twenty years as illegal.
‘The major concern is India’s trade deficit may widen on higher imports due to mine cancellations,’ said a Mumbai based currency analyst at Angel Broking Ltd.
The Rupee was also under pressure from increased demand from oil importers for US Dollars.
As the session progressed, the Rupee then rallied sharply after credit rating agency Standard and Poor’s raised India’s sovereign credit rating outlook. S&P also raised its outlook from a BBB-minus rating back from negative to stable.
‘The stable outlook for the next 24 months reflects our view that the new government has both the willingness and capacity to implement reforms necessary to restore some of India’s lost growth potential, consolidate its fiscal accounts, and permit the RBI to carry out effective monetary policy’, said Standard and Poors.
The agency deemed that Prime Minister Narendra Modi’s government has a strong enough mandate to allow it to implement the fiscal and economic reforms needed to create growth in the Indian economy.
‘The S&P rating outlook revision is an affirmation of the economy’s growth prospects, macro stability and lower vulnerability of external balances. The government, backed by a decisive mandate, and a credible inflation-fighting central bank have provided a positive backstop for the economy and is likely to boost investor confidence in the months ahead,’ said Radhika Rao, an economist from Singapore based DBS.
Indian Rupee to Pound Sterling Exchange Rate Forecast
The Rupee is likely to retain its gains against the Pound over the weekend but is likely to experience volatility next week. The Reserve Bank of India delivers its latest Interest Rate Decision on Tuesday and the UK sees the publication of the latest Gfk Consumer Confidence data.
Also of interest to Indian Rupee traders next week will be Wednesday’s HSBC Manufacturing PMI data.
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,0.0164 ,
Indian Rupee,,British Pound,1.0051 ,
Indian Rupee,,Australian Dollar,0.0186 ,
Pound Sterling,, Indian Rupee,99.4750 ,
Euro,, Indian Rupee,77.6230 ,
US Dollar,, Indian Rupee,61.1400 ,
[/table]
