Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate – Rupee softens as exports fall

The Indian Rupee weakened against the Pound on Tuesday after data showed that Indian exports declined for the first time in eight months last month, reducing hopes that an export-led recovery could boost economic growth this year.

According to data released by the Indian trade ministry, exports in February fell by 3.67% from the previous year. The value of exports dropped to $25.68 billion. The ministry didn’t explain or elaborate as to why it believes exports dropped, but economists were blaming the decline on a fall in demand for Indian goods from Europe and the United States.

“The deceleration in exports in February instead of an increase reflects the inability of Indian exporters, particularly those in small enterprises, to stay competitive,” said Anupam Shah, the chairman of EEPC, an industry body for export of engineering goods.

Despite the disappointing export figure the overall trade deficit narrowed by 42% to $8.1 billion. The cause of the sharp narrowing was due to the sharp decline in exports and a drop in imports which fell by 17% to $33.8 billion from the previous figure of $40.7 billion. The fall was a result of a sharp decline in demand for gold imports.

Sterling meanwhile found support from the release of better-than-expected industrial and manufacturing production data which increased optimism in the UK’s economic recovery. Yesterday saw the currency decline against the majority of its peers after the Bank of England’s deputy governor talked down the currency.

The Rupee is likely to experience some volatility on Wednesday due to the publication of the latest inflation rate report and industrial and manufacturing production data.