Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate- Rupee rises as WPI softens

The Indian Rupee made gains against the Pound on Wednesday following the release of a wholesale-price index report which showed that price pressure is easing in Asia’s third largest economy.

According to the Indian Commerce Ministry based in New Delhi the WPI rose by 6.16% in December from the previous figure recorded in 2012. The figure was down from November’s figure of a rise of 7.52%.

The softening in inflation is good news for the Rupee as it eases concerns over the rapid price hikes that have had a negative impact on the Indian economy. It’s also good news for Indian citizens who have struggled under the high prices and could bolster growth as they see the burdens on their wallets ease.

The report also increases the likelihood that the Reserve Bank of India will opt to refrain from altering the benchmark repurchase rate at 7.75% when policy makers gather on January the 28th.

“The number will at most enable the Central Bank to hold rates later this month. Whilst inflation easing is positive, price increases remain at a level that won’t allow the RBI to consider cutting rates soon,” said an economist.
Inflation has been a major point of contention ahead of elections due to be held before May. The government has come under pressure and Prime Minister Manmohan Singh recently said that his government could have done better at controlling price rises even as incomes increased above inflation.

Currently the PM’s party is trailing in the polls.