Pound to Indian Rupee (GBP/INR) Exchange Rate News – Sterling stronger after IMF report

While the Rupee edged slightly higher against the US Dollar as the local session got underway, bets that the Federal Reserve will continue tapering stimulus in spite of disappointing US data kept pressure on the emerging-market asset.

The Rupee was also affected as the International Monetary Fund warned that India needs to be prepared to protect its currency should further market volatility occur.

In a recent report the IMF asserted that although India’s financial circumstances have improved slightly in the past year, the reduction of easing in the US could inspire renewed instability in global currency markets, and that a plan is needed to counteract any adverse affects.

The IMF called for the possible increase of interest rates, the opening of foreign exchange swap windows and Rupee flexibility.

In a statement the IMF said; ‘The principal risk facing India is the inward spillover from a tightening of global liquidity interacting with domestic vulnerabilities. […] If faced with a similar round of capital flow volatility [the Reserve Bank of India] indicated that the thrust of their response would likely be similar, using a combination of exchange rate flexibility, some monetary tightening, and, if needed, limited use of foreign exchange reserves. ’

Before the release of Indian foreign reserve figures, Rupee gains against the US Dollar were limited as the ‘Greenback’ was buoyed against its higher risk rivals ahead of the publication of the US existing home sales report.

The Rupee also weakened against the Pound even as UK retail sales were shown to have fallen by more than forecast last month.
Sterling was able to advance on its higher-risk rivals as separate data showed that the UK recorded a budget surplus in January, although the surplus was smaller-than-expected.

Next week economic data for India is thin on the ground until Friday.

At the close of the week Indian foreign reserves figures and the nation’s growth report could have an impact on GBP/INR trading.

The pairing is also likely to fluctuate in response to UK home loan, CBI reported sales, GDP and consumer confidence reports for Britain.

Of course developments in the US will continue to be of particular interest, with Friday’s US growth report and University of Michigan Confidence Index being two releases to focus on.