Indian Rupee (INR) Exchange Rate Close to 11-Month High
After India’s election results were announced, the Rupee surged against its currency counterparts, achieving an 11-month high against the US Dollar.
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The Bharatiya Janata Party took 282 seats, pushing above the 272 seats needed to win the majority and oust the heavily criticised Congress party.
It was the first time a single party had won an outright majority in Parliament’s lower house (the Lok Sabha) since 1984 and many local people hope it will mark a turning point in India’s economic fortunes.
As the Congress Party has been dogged by corruption allegations and anger regarding slow domestic growth, this result was warmly welcomed in many quarters.
The Rupee advanced by 0.5 per cent against the US Dollar on Monday following a five-day advance of 2.1 per cent last week.
In the view of currency strategist Craig Chan; ‘The election result was clearly better than we expected. The outlook for reforms, potential foreign inflows and growth prospects will be even more positive now.’
Last Friday the Rupee consolidated gains against the US Dollar after the US University of Michigan confidence index unexpectedly declined.
The index slipped 84.1 to 81.8 in May. Economists had expected the index to advance to 84.5.
The Pound was also weaker against the Rupee due to concerns that the surge in UK house prices could be detrimental to the UK’s economic growth.
After Bank of England Governor Mark Carney warned that rising house prices are a serious risk, Rightmove data showed that asking prices jumped to record levels in May, climbing 3.6 per cent month-on-month.
Over the next few days there are no economic reports for India to be aware of other than the nation’s foreign reserves figures (due out on Friday).
Movement in the USD/INR pairing will most likely be caused by the publication of minutes from the Federal Reserve’s latest policy meeting, US initial jobless claims figures and the US new home sales report.
Investors with an interest in the GBP/INR exchange rate will be focusing on UK inflation and retail sales data.
If the UK’s consumer price index shows that prices climbed, the odds of the BoE introducing a rate increase will rise and the Pound could be buoyed.
Other news to watch out for includes China’s manufacturing PMI and German growth data.
Events in Ukraine are likely to continue having an impact on risk-appetite.
The British Pound is currently trading against the Rupee in the region of 98.3038.
The US Dollar is currently trading against the Rupee in the region of 58.4800.