Pound to Rupee Exchange Rate Advances, INR to USD Close to Seven Month High

Economic reports for India might be few and far between this week but the Rupee surged against peers like the Pound (GBP) and US Dollar (USD) on Tuesday.

The emerging-market currency broadly strengthened on hopes that the instatement of a new Indian government will have a positive impact on the nation’s economic performance.

India’s elections are scheduled to begin in April and the opposition Bharatiya Janata Party is dominating opinion polls.

Bloomberg News quoted one Singapore-based strategist as observing; ‘Overall fundamentals are improving for India and there’s a market perception that a BJP win could be very good for inflows. This is a very positive time for the Rupee.’

As well as strengthening against a struggling Pound, the Rupee was briefly able to achieve an eight-month high against the US Dollar before a downward correction saw the Indian currency ease close to a seven-month high. The Indian Rupee to US Dollar (INR/USD) exchange rate is currently around 0.0165.

Although Rupee gains were slightly restricted by oil firm demand, continued foreign inflows helped push shares to record highs.

In the opinion for foreign exchange trader Hari Chandramgethen; ‘Custodian banks were offering Dollars but good bids came in from state-run banks, pulling the Rupee off highs. There is good support for the Dollar/Rupee at 60.50-60 levels. I expect a range of 60.30 to 61.10 for the pair in the rest of the week.’

Meanwhile the Rupee’s bullish relationship with the Pound was aided by the news that UK inflation slumped to its lowest rate for over four years in February, giving the Bank of England more reason to hold interest rates at record lows for the foreseeable future.

The Rupee could consolidate and even extend its advance on the ‘Greenback’ later today if the US consumer confidence index fails to show the improvement expected.

Economists have forecast that the measure edged up from 78.1 to 78.6 in March, but a disappointing result could cause some US Dollar losses.

Similarly, today’s US new home sales report is expected to show a decline of 4.9 per cent in February (month-on-month) following an advance of 9.6 per cent in March.

The only Indian data to take note of this week is the nation’s foreign reserve figures, due out on Friday.

Further Pound to Rupee (GBP/INR) movement may be occasioned by Thursday’s UK retail sales report. If sales are shown to have rebounded in February the Pound could recover recent losses.