Indian Rupee to US Dollar (INR/USD) Exchange Rate Forecast to Come Under Pressure
After advancing by the most for three weeks on Monday, the Indian Rupee to US Dollar (INR/USD) exchange rate softened over the course of local trading on Tuesday.
Increased demand for the ‘Greenback’ from importers and generally improved sentiment towards the US Dollar saw the Rupee fall. The Pound Sterling to Indian Rupee exchange rate also advanced by around 0.2%.
Some industry experts have intimated that persistent US Dollar strength could inspire vulnerability in the Rupee in the short to medium term.
According to analysts; ‘The INR has typically been unable to withstand this cross-currency pressure despite a favourably movement in Brent [crude oil]. [RBI] Governor Rajan will not want to take chances with INR expectations beyond Rs65/Dollar.’
Tomorrow India’s Manufacturing/Industrial Production report and inflation figures could trigger Rupee exchange rate movement.
The Rupee later recovered losses against the US Dollar, prompting this response from currency expert Ankur Jhaveri; ‘The prospect of faster economic growth and interest-rate cut expectations on easing inflation are all helping the Rupee.’
The USD/INR exchange rate hit a high of 61.6400
UPDATE
The Indian Rupee experienced movement on Wednesday after the pace of domestic inflation was shown to have slowed unexpectedly.
Declines in the emerging market asset were limited after both Indian Industrial and Manufacturing Production accelerated by more-than-forecast.
Pound Sterling to Euro (GBP/EUR) Exchange Rate Trends Lower after Inflation Report
A better-than-expected Like-for-Like Sales report from the British Retail Consortium helped the Pound Sterling to Euro (GBP/EUR) exchange rate advance modestly during the European session.
Euro movement was limited due to a lack of economic data for the Eurozone, but the GBP/EUR pairing did edge up 0.2%.
On a like-for-like basis, UK retail sales were shown to have stagnated in October rather than falling the -0.5% expected.
While clothing and food sales fell short, demand for big-ticket items increased.
Jenny Cosgrave of CNBC said this of the data; ‘The exception to the poor showing for clothing was Halloween costumes. Retailers posted a strong end to October, as costumes of characters from hit children’s films such as ‘Frozen’ resulted in a significant year-on-year increase in Halloween-related sales, data showed.’
Tomorrow the Pound Sterling (GBP) exchange rate could experience significant movement as the UK publishes its employment data. The average earnings figure will be of particular interest.
The Pound could also come under pressure as the BoE publishes its inflation forecast. Downgrades to the central bank’s inflation or growth projections would be Pound-negative.
The GBP/EUR exchange rate hit a high of 1.2763 on Monday
The Pound was trending in a narrow range against both the Euro and US Dollar on Wednesday as investors held back prior to the publication of the UK’s potentially influential employment figures.
If UK wage data surprises to the upside, we could see a Sterling surge. That being said, any Pound gains could be undermined by the Bank of England’s inflation report. The direction the Pound takes will be dependent on whether the bank adopts a hawkish or dovish tone.
UPDATE
Although UK wage data showed a stronger than forecast increase in average earnings, the Pound shed initial gains on the back of a particularly pessimistic inflation report from the Bank of England.
As the central bank slashed both its growth and inflation projections, Sterling posted widespread decline, losing over 0.6% against both the Euro and US Dollar.
US Dollar to Pound Sterling (USD/GBP) Exchange Rate Steady Amid Lack of Data
On Monday the US Dollar to Pound Sterling (USD/GBP) exchange rate strengthened off the back of a steady US Labour Conditions index.
The ‘Greenback’ rallied across the board as sentiment towards the asset warmed following Friday’s below-forecast US jobs and wage data.
The expectation that the Federal Reserve will increase interest rates early next year helped the US Dollar advance on the Australian Dollar but the American asset was holding steady against both the Euro and Pound amid a lack of influential economic reports for the Eurozone, UK or US.
The US Dollar to Pound Sterling (USD/GBP) exchange rate was trading in the region of 0.6306
South African Rand to US Dollar (ZAR/USD) Exchange Rate Softer Despite Manufacturing Recovery
With the US Dollar stabilising after last week’s sub-par Non Farm Payrolls report, the South African Rand to US Dollar (ZAR/USD) exchange rate weakened on Tuesday.
The Rand continued trending in a softer position against its US counterpart despite impressive South African Manufacturing Production figures.
Manufacturing Production was shown to have increased by 4.0% on a month-on-month basis following a revised increase of 1.55% in August. Economists had expected a decline of 1.34%.
On the year Manufacturing Production was up 8.0%, completely contradicting estimates of a -0.9% decline.
In the view of industry expert James Boston; ‘Today’s strong rebound in the industrial sector will be very welcome by the South African authorities due to the deteriorating economic outlook that faced the country. Although very narrowly avoiding a technical recession based on the last two quarters GDP readings, South Africa is facing a number of economic challenges including unemployment above 25% and mounting public debt. The government has slashed this years growth forecast from 2.7% to just 1.4% and the Moody’s rating agency has recently followed it’s peers in downgrading the country’s status to investment grade. The manufacturing pick up will assist the country get back on a growth track but this currently faces further risks from a weakening global economy and domestic energy shortages.’
UPDATE
The Rand extended declines against the US Dollar on Wednesday after South African retail sales dropped by -0.8% in September, month-on-month. An increase of 0.3% had been expected.
The US Dollar to South African Rand (USD/ZAR) exchange rate achieved a high of 11.3315
