The Pound Sterling to Indian Rupee (GBP/INR) exchange rate softened on Monday due to increased speculation that falling oil prices will help reduce India’s current account deficit.
Trade of the GBP/INR exchange is forecast to be light this week due to many market participants going on their Christmas and end of year holidays. Despite that, oil prices continued to fall, a move that continues to create ripples on the currency market.
Crude oil prices fell again on Monday despite staging a slight comeback earlier in the session as economists deemed comments made by OPEC were likely to worsen a global oversupply of the commodity.
Saudi Arabia said that it and other OPEC members will continue to keep producing oil at its current levels and suggested that non-OPEC members cut their production if they want prices to improve. Iraq also announced that it plans to increase its oil production next year sending trading volatility of the commodity to its highest level in more than three years.
Prices of ‘black gold’ briefly increased on comments that suggested prices will recover naturally as global demand improves and as Libyan oil production suffered from disruptions. Battles between Libyan government and Islamic militants forced the closure of a third oil port earlier in the session.
‘Oil prices dropping significantly is a huge positive for the management of India’s external situation and the Rupee,’ said Sujan Hajra, a Mumbai based economist.
Lower oil prices could assist the Rupee as it could lead to a shrinking of India’s large current account deficit. Lower prices could also make India less vulnerable to outflows of capital in case the USA chooses to raise interest rates early next year.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast
The Pound is forecast to regain ground against the Indian Rupee later in the week and could advance on Tuesday if Gross Domestic Product (GDP) data confirms that the UK economy expanded by 0.9% on a quarterly basis and by 3.2% on year on year basis. Economists are forecasting for figures of 0.7% and 3.0% respectively.
The Rupee meanwhile is likely to come under pressure from end of month demand from importers.
‘Some month end and quarter end demand should push the Indian Rupee exchange rate down later this week and next week,’ said Hari Chandramgethen, head of foreign exchange at South Indian Bank.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate
The Pound Sterling to Indian Rupee exchange rate is trading at a session high of 99.0290
The Pound Sterling to Indian Rupee exchange rate is trading at a session low of 98.6120
The Pound Sterling to Indian Rupee exchange is trading in the region of 98.7800
