Pound to Indian Rupee (GBP/INR) Exchange Rate Steady, USD to INR Recovers from Two-Week Low

The Pound to Indian Rupee exchange rate was up 0.29 per cent on Friday in spite of disappointing UK trade figures.

While the Rupee advanced by the most for two weeks against the US Dollar thanks to European Central Bank inspired risk appetite, the emerging-market currency failed to strengthen against its British counterpart.

According to one Mumbai-based foreign-exchange trader; ‘The ECB’s aggressive rate cut has spurred demand for high-yielding Asian assets. The currency will probably trade in a 59.05 to 59.45 range today.’

The ECB’s decision to cut interest rates to record lows, introduce a negative deposit rate and bring in additional stimulus measures to bolster the Eurozone’s flagging recovery pushed investors towards higher yielding investments and helped the Rupee climb.

However, the Indian currency’s gains were short lift and the USD to INR pairing later trimmed losses on speculation that the Reserve Bank of India intervened in the currency market.

The RBI supposedly snapped up Dollars due to continuing foreign inflows.

The US Dollar was also supported by the expectation that today’s US non-farm payrolls report will show that the US economy added 215,000 positions last month.

If this estimation proves accurate it would be the fourth consecutive month that the NFP figure has come in above 200,000.

April recorded a payrolls gain of 288,000.

The unemployment rate for May is expected to have risen from 6.3 per cent (nearly a six-year low) to 6.4 per cent.

Before the US report was published research strategist Millan Mulraine was quoted as saying; ‘We expect the positive momentum in labour-market activity to persist. The performance in the labour market will reflect the continued pickup in domestic economic growth momentum, which should lift job growth to an above- 200,000 pace on a more sustained basis.’

However, this week’s US ADP employment change report fell short of forecasts and another disappointing result could dent the appeal of the ‘Greenback’ and see the Rupee rally before the weekend.

Today’s UK trade balance report showed that the UK posted a wider than anticipated trade deficit in April.

The deficit grew from 8.29 billion Pounds in March to 8.92 billion pounds in April due to a 1.5 per cent slide in exports.

Imports were up 0.8 per cent.

India’s foreign reserves figures had little impact on the Rupee today, but next week’s domestic reports (including inflation rate, manufacturing production, industrial production and deposit growth) are likely to have more of an impact on the Rupee exchange rate.

The UK’s employment report (due out on Wednesday 11th) is also likely to impact the GBP to INR exchange rate.