Pound to Indian Rupee (GBP/INR) Exchange Rate Higher, USD to INR Gains

The Rupee lost some of its appeal as local trading opened, declining against the Pound and falling to a four-week low against the US Dollar.

While speculation surrounding the much anticipated Indian general election continues to lend the Rupee support, the emerging-market asset has slipped in recent days.

The main reason for the Rupee’s decline is the fact that importers appear to have increased their US Dollar purchases in order to cover payments at the tail end of the month.

Figures revealed that 1.1 billion US Dollars of Indian Bonds were sold in the first two and a half weeks of April.

However, in the opinion of a currency expert with DCB Bank; ‘The Rupee’s weakness is primarily because of huge Dollar demand from importers. I think the currency should stabilise now as these are attractive levels for exporters to sell the ‘Greenback’.

The GBP to INR pairing’s strength was also the result of the lingering impact of last week’s unexpectedly impressive UK employment data. The jobs figures added to the case for the Bank of England raising interest rates from record lows and helped buoy the Pound against almost all of its most traded currency counterparts.

Meanwhile, the US Dollar was enjoying a bullish relationship with several of its higher-risk peers as a result of Ukraine-inspired risk-aversion and the expectation that today’s US manufacturing report will show improvement.

The Richmond Fed manufacturing index is forecast to climb from -7 to 2 in April, adding weight to the Federal Reserve’s policy of gradually tapering stimulus.

Indian economic data is thin on the ground this week, with just Friday’s foreign reserves figures to be aware of.

However, over the next four days the Pound to Indian Rupee pairing may well fluctuate as a result of UK business optimism, public finance, reported sales and retail sales figures.

Of course, the publication of minutes from the Bank of England’s latest policy meeting (taking place tomorrow) could also have a notable impact on the direction taken by Sterling this week.