US Dollar to Indian Rupee (USD/INR) Exchange Rate Rallies, GBP/INR Trending Lower
The US Dollar to Rupee (USD/INR) exchange rate has softened notably over the course of the week and the Rupee is now on track to record its most considerable five-day gain against its US counterpart for a month.
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The Rupee softened last week as the situation in Iraq drove up oil prices and inspired concerns over India’s trade deficit.
However, oil prices have since come off the boil and the Rupee has been able to rebound from recent lows.
Although the unrest in Iraq continues, investors are betting that the situation will not greatly disrupt the oil supply.
Consequently, the price of Brent crude has plummeted after reaching an almost nine-month high.
With the price of oil coming down by 2.1%, the prospect of India’s trade deficit widening from a ten-month high of 11.2 billion Dollars has been dampened and the Rupee has rallied.
The emerging market asset was stronger against both the US Dollar and Pound.
According to currency expert Ankur Jhaveri, India’s asset is ‘closely tracking global crude oil prices. A cooling off of oil prices means there will be less pressure on the Rupee.’
The US Dollar to Rupee (USD/INR) exchange rate has also been adversely affected by this week’s disappointing US data releases.
On Wednesday final first quarter growth figures for the US shocked the market by coming in at -2.9% instead of the -1.8% expected.
This report was followed by below-forecast Durable Goods Orders, Consumer Consumption and Personal Spending figures.
The data adds to the case for the Federal Reserve keeping fiscal policy accommodative for the foreseeable future and left the US Dollar trending lower against almost all of its rivals.
According to Greg Gibbs, investors are ‘giving up on some long Dollar positions’ as a result of the latest events.
The Rupee has also gained against the Pound this week, despite the fact that UK fundamentals have been fairly positive.
Today’s GfK Consumer Confidence index showed that sentiment in the UK increased in June, albeit more modestly than hoped.
Similarly, while a separate report revealed that British house prices climbed this month, the pace of price growth was the slowest for five-months.
The UK also published final first quarter growth data which confirmed expansion of 0.8% in the first three months of the year.
Next week there are several influential Indian economic reports to be aware of, including the nation’s HSBC Manufacturing PMI, Services PMI and foreign reserves figures.
If the reports should show improvement the US Dollar to Rupee (USD/INR) exchange rate could fall further.
The British Pound is currently trading against the Rupee in the region of 102.2800.
The US Dollar is currently trading against the Rupee in the region of 60.0950.