Economists have forecast that the Reserve Bank of India will opt to increase the benchmark interest rate for a second consecutive month when it meets tomorrow.
While the Rupee has enjoyed a sharp rebound against peers like the US Dollar since Raghuram Rajan took over as Governor of the RBI, last month’s surprise rate hike triggered Rupee declines, and tomorrow’s decision could have the same effect.
The Pound Sterling to Indian Rupee Exchange Rate was in the region of 99.5222 as of 12:55 GMT
That being said, with the majority of industry experts foreseeing the repurchase rate being increased to 7.75 per cent, reactive movement is unlikely to be so significant.
According to economist Sonal Varma; ‘Higher benchmark borrowing costs are likely to weigh on already weak economic expansion. That’s the price India has to pay to get better control of the cost of living.’
The Pound Sterling to Rupee (USD/INR) exchange rate hit a high of 99.8351
It is also expected that Rajan will further alleviate the emergency liquidity measures put in place to support a flagging Rupee earlier in the year.
While India’s economic growth is slowing, the fact that domestic inflation is up nearly 10 per cent from the same period of last year is limiting the Governor’s options and making it increasingly likely that he’ll have to trim local demand.
In the opinion of Mumbai-based strategist Tirthankar Patnaik; ‘The Governor is moving towards simplifying monetary policy. He’s aiming to restore the repo as the operative policy rate and prioritising the need to anchor inflation expectations, which should be good for the Rupee and economy longer term.’
The Pound rallied against the Rupee during the European session as UK house prices continued to increase in October. However, GBP/INR gains were trimmed as UK CBI reported sales unexpectedly plummeted from 34 to 2 this month.
While the report was disappointing, the CBI chairman asserted that there is optimism that this lacklustre result is ‘just a blip’. On the year sales were up by 2.2 per cent.
The week’s other influential Indian news is the publication of the nation’s HSBC/Markit manufacturing PMI, taking place on Friday. The gauge of manufacturing came in at 49.6 in September, below the 50 mark separating growth from contraction.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 99.5222 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 84.7957 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.4975 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 59.0093 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 51.1158>
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.8834 >
(Correct as of 12:55 GMT)
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