The Pound to Rupee (GBP/INR) Exchange Rate advanced on Monday as emerging market currencies were weighed upon by concerns over the Chinese economy and a rise in tensions in Ukraine.
The Rupee softened along with the South African Rand (ZAR) and Turkish Lira (TRY) as demand for emerging market currencies was muted by the release of a report by the World Bank.
In its report the World Bank cut its growth forecast for the Chinese economy, citing that it has experienced a bumpy start to 2014. A run of disappointing data releases initially offered support to emerging currencies as economists speculated that the Chinese authorities will introduce monetary stimulus measures in order to bolster the economy.
The Chinese government set out a reform plan last year and this week announced increased spending on infrastructure projects to get the world’s second largest economy back onto the right track.
“The Chinese government has announced some modest pro-growth measures in recent weeks but, given challenging macro-economic conditions, it will require much more stimulus if the economy is to expand by 7.6% this year.
However, a significant loosening of monetary or fiscal policy would compromise the reform agenda that the World Bank also praises in its report. The Economist Intelligence Unit expects growth of 7.3% in 2014, marginally undershooting the official target of 7.5%,” said Tom Rafferty, China Analyst at the Economist Intelligence Unit who believes the World Bank is too optimistic.
Sentiment for riskier assets was also muted due to renewed tensions in Ukraine. Thousands of pro Russian protestors clashed with police in the east of the country, raising concerns of a military intervention like the one seen in the Crimea.
Losses for the Rupee were restrained somewhat as optimism remains high ahead of upcoming elections.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Indian Rupee,99.7378 ,
Euro,,Indian Rupee,82.5232 ,
US Dollar,,Indian Rupee,60.1550 ,
Australian Dollar,,Indian Rupee,55.8678 ,
[/table]
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