The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is forecast to reach a two-month high as concerns over the global economy and falling oil prices bolstered demand for safer haven assets and weakened demand for riskier emerging market currencies.
As well as the reduced demand for riskier assets, the Indian Rupee was weakened by domestic economic data, which showed that Indian wholesale prices stagnated unexpectedly in November, increasing pressure on Indian central bank governor Raghuram Rajan to cut interest rates.
According to the data, the nation’s wholesale price index did not rise for the first time since July 2009 when it softened by 0.31%. The majority of economists were expecting a rise in the index.
‘Substantial efforts have been made by the government to ensure a recovery in the economy. All this can now be complemented by a reduction in interest rate by the central bank,’ said Chandrajit Banerjee, director general of the Confederation of Indian Industry last week.
India’s Trade Deficit Widens
Also weakening the Rupee was a separate report which showed that India’s trade deficit widened to an 18-month high in November. A surge in demand for gold imports added to the $16.86 billion shortfall, the largest seen since May 2013. Gold imports leapt by 34%.
There was some positivity from the report as it showed that the imports of machinery and transport equipment increased by 40% suggesting that investment in the nation’s manufacturing sector is rising and bodes well for the economy’s future and economic growth.
Also boosting the economic outlook, merchandise exports recovered to post a 7.27% annual growth in November. India’s exports contribute about 25% to its gross domestic product.
US Data Weighs on Indian Rupee Exchange Rate
Positive economic data out of the USA, added to the Rupees weakness, demand for the US Dollar increased as oil importers prepared to settle end of month payments. The data out of the USA showed that manufacturing output in the world’s largest economy expanded in November, raising speculation that the Federal Reserve is edging closer to hiking interest rates.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate
The Pound Sterling to Indian Rupee exchange rate is trading at a session high of 99.1030.
The Pound Sterling to Indian Rupee exchange rate is trading at a session low of 97.8580.
The Pound Sterling to Indian Rupee exchange is trading in the region of 98.8990.
