While the Pound dropped to a three-week low against a bullish US Dollar following the release of UK housing data, the British asset also edged lower against the Rupee.
Although the appeal of the emerging market asset has been dampened by this week’s upbeat US data – which supports the case for more Fed tapering – the Rupee was able to pare losses against the ‘Greenback’ and post a modest gain against the Pound.
The Rupee was supported overnight after Moody’s Investor Service, one of the three main ratings agencies, stressed that India is unlikely to be downgraded.
In a report Moody’s implied that if the pace of global growth continued India could experience a gradual economic recovery in the final six months of 2014.
A Moody’s analyst was also quoted as saying that India’s Baa3 rating and stable outlook is unlikely to be negatively revised in the near future.
However, as well as stating that ‘the outcome of national elections this year could also affect growth, depending on how it impacts sentiment and policies’ the analyst asserted; ‘India’s government debt ratios and fiscal deficits will remain higher than those of similarly rated peers in 2014.’
More positively, it was observed that ‘the structure of India’s government debt – which is owed mostly domestically, in domestic currency, at relatively low real rates, and at relatively long tenors – has mitigated stress on the government’s fiscal positions.’
Indian Rupee Forecast
Tomorrow GBP/INR movement is most likely to be driven by the UK’s retail sales report, although Indian deposit growth/bank loan growth and foreign reserves data will also be of interest.
The UK sales report is forecast to show a 0.3 per cent increase in sales.
A surprise result could inspire Pound volatility, and if the report follows the recent trend in UK data and falls short of estimates Sterling could head into the weekend trading lower against peers like the Rupee.
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,100.6060 ,
US Dollar,,Indian Rupee,61.5800 ,
Euro,,Indian Rupee,83.8065 ,
Australian Dollar,,Indian Rupee,54.0928 ,
New Zealand Dollar,,Indian Rupee,51.1707 ,
[/table]
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