GBP/INR, USD/INR Exchange Rates softer as Rupee Follows other Emerging Markets Higher
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However, the US Dollar to Indian Rupee (USD/INR) exchange rate continued trending in the region of a seven-month low as Fed rate bets kept the ‘Greenback’ bolstered and India’s own manufacturing figures fell short.
Yesterday the Reserve Bank of India acted as economists expected and opted to leave interest rates on hold in order to counter the nation’s inflation issues.
The Rupee was able to garner some support from comments issued by RBI Governor Raghuram Rajan. The central bank chief flatly denied rumours that the RBI has been intervening in the currency market to prevent further Rupee depreciations. He stated; ‘In recent weeks, what has been happening is the Dollar has been appreciating against other currencies, therefore when we look at our reserves in Dollar terms, they have been coming down’.
Today’s Indian Manufacturing PMI also pointed to a potential area of concern, with manufacturing sector growth slowing from 52.4 in August to 51.0 in September. A more moderate decline to 51.6 had been anticipated.
Although the report indicated that operating conditions were improving, the sector saw its slowest pace of growth since the close of 2013.
According to HSBC official Frederic Neumann; ‘Manufacturing activity continues to slow amid weaker output and new order flows. Responding to the slowdown, firms lowered purchases and trimmed inventories. On the positive side, the rate of cost inflation decelerated sharply and output prices were unchanged.’
Neumann continued; ‘The central bank is likely to look beyond the near term moderation and keep policy rates elevated so as to reign in entrenched inflation expectations. The RBI would rather see growth recover supported by supply side reforms than through monetary policy stimulus.’
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate fell to a low of 99.7240
Although Sterling had been bolstered by an upward revision to the UK’s second quarter growth data on Tuesday, the British asset came under considerable pressure on Wednesday after domestic Manufacturing PMI unexpectedly decelerated.
The index fell from 52.2 to 51.6 in September instead of climbing to 52.7 as expected.
The Pound accordingly softened against almost all of its currency counterparts.
The US Dollar to Indian Rupee exchange rate was trending slightly lower ahead of the release of the highly-influential US ISM Manufacturing gauge.
If the report supports the case in favour of a sooner-rather-than-later interest rate increase from the Federal Reserve, the USD/INR exchange rate may rebound before the close of the local session.
Yesterday’s US Consumer Confidence index unexpectedly dropped to a four-month low.
Pound Sterling to Indian Rupee (GBP/INR) Exchange Rate Forecast
Tomorrow movement in the Pound Sterling to Indian Rupee exchange rate could be caused by the UK’s Markit Construction PMI and the Bank of England’s Financial Policy Committee publishing its statement.
There are no major Indian reports to be aware of.
The direction taken by the USD/INR exchange rate will be dictated by the US jobless and factory orders stats.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate is currently trading in the region of 99.9570
The US Dollar is currently trading against the Rupee in the region of 61.6950
The Indian Rupee advanced against both the Pound and US Dollar on Thursday as it took advantage of speculation that the US Dollars recent strong rally has been overdone.
A fall in oil prices also added support to the currency as the value of the commodity fell to its lowest level in 17 months. India is a major importer of the commodity so the decline is likely to improve the nation’s trade balance.
The Rupee was also continuing to take advantage of the weaker than forecast manufacturing PMI data released on Wednesday in both the US and UK.