The Indian Rupee is on track to make its fourth consecutive weekly decline against the Pound and US Dollar, its longest losing streak seen since April.
The fall comes as worries grow that a rise in global oil prices as a result of the Iraqi conflict could widen India’s trade deficit and increase inflation in the Asian nation.
The price of crude oil surged yesterday to its highest level since last September as traders grew worried that oil supplies could be disrupted.
After seeing India’s trade deficit widen sharply to its worst level for 10-months of $11.2 billion in May, the concern is that next month’s figure could be even worse as oil prices continue to climb.
Inflation too is likely to see a rise after last month’s figure saw it reach its fastest pace of the year so far.
Islamist fighters belonging to the Islamic State of Iraq and the Levant have continued to battle Iraqi government forces in Baiji, the country’s largest oil refinery.
The Jihadists also claimed to have captured most of Tal Afar airport.
The USA has ruled out deploying ground forces to help fight the jihadists but has said that it will be sending 300 military advisors to the country.
US Secretary of State John Kerry is expected to travel to Iraq soon to press for a more representative cabinet, hoping this could ease tensions between the country’s rival Muslim sects.
“The Rupee remains hostage to geopolitical tensions in the Middle East. It’s expected to remain volatile in the near term,” said a currency analyst from the Mumbai based Kotak Securities Ltd.
Updated: 10:30 GMT Saturday 21st June
The Pound Sterling to Indian Rupee exchange rate has risen from 99.06 at the beginning of June to the high of 102.47 recorded earlier this week.
While the Rupee had been boosted by the successful national elections (and the resultant rising hopes regarding India’s brighter economic future) the Pound has been on a winning streak ever since Bank of England Governor Mark Carney intimated that borrowing costs could be hiked this year.
If a rate hike were to occur it would confirm that the UK economy is performing at close to pre-crisis levels and be a validation of everything the nation has achieved over the last 18 months.
Next week’s UK data releases, including consumer confidence and GDP figures, could add to the case for a rate increase. If that proves to be the case the Pound Sterling to Indian Rupee exchange rate could trend higher in the days ahead.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Euro,
,Indian Rupee,81.9353 ,
Pound Sterling,,Indian Rupee,102.6920 ,
US Dollar,,Indian Rupee,60.2250 ,
Australian Dollar,,Indian Rupee,56.6376 ,
[/table]
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