Problems For BRIC Nations Forecast To Send Pound Rupee (GBP/INR), Australian Dollar (GBP/AUD) & NZ Dollar (GBP/NZD) Exchange Rates Higher

June 2, 2014 - Written by John Cameron

STORY LINK Problems For BRIC Nations Forecast To Send Pound Rupee (GBP/INR), Australian Dollar (GBP/AUD) & NZ Dollar (GBP/NZD) Exchange Rates Higher

Problems for BRIC nations are forecast to send the Pound Rupee exchange rate (GBP/INR), Pound Australian Dollar exchange rate (GBP/AUD) and Pound NZ Dollar exchange rate (GBP/NZD) higher. The collective economies of Brazil, Russia, India and China have been prominent in the thoughts of global market participants since legendary banker Jim O’Neill, (who retired as Chairman of Goldman Sachs last year), coned the phrase ‘BRIC Nations’ over a decade ago in a research paper entitled ‘The World Needs Better Economic BRICs’.

O’Neil predicted at the time that these emerging economic superpowers would drive global growth in coming decades as the traditional Western economies expanded at an increasingly sluggish pace. It’s a slow-burning theory, but one which appears to be panning out well for O’Neil, with best estimates now forecasting that four of the six leading global economies, (as gauged by GDP) will be BRIC nations by the year 2050.

However, recent sessions have brought a few wobbles in the growth path of these emerging market forces. Figures published at the end of last week pointed to a marked slowdown in activity levels in India’s manufacturing sector which dragged down the nation’s overall level of expansion to an annualised 4.6% during the three months to the end of March. This was well below analysts’ expectations and down on the most recent full year’s figure of 4.7%. It would appear that India’s Prime Minister-Elect Narendra Modi has a significant job on his hands in attempting to kick-start the flagging sub continental economy. Investors certainly believe so, based on Friday’s price action, when the Pound Rupee exchange rate climbed to above the 99.50 GBP/INR threshold.

Friday brought similarly bad news for the Brazilian economy, with official figures suggesting that the ‘Samba Nation’ is has enjoyed very little economic benefit from hosting this year’s FIFA World Cup up to this point. The soccer jamboree begins in two weeks, but last week’s numbers showed a downward revision to Brazil’s quarterly GDP growth from 0.4% to 0.2% during Quarter One. The little-traded Brazilian Real (currency:BRL) slumped in response, sending the Pound Real exchange rate up above the 3.75 (GBP/BRL) level.

With recent Chinese growth numbers also pointing to a downturn for the world’s second most developed economy and with skirmishes continuing on Russia’s Western border with Ukraine, it appears likely that the BRICs progress has hit a wall, for now at least. The attendant dip in global investor sentiment which follows could also suppress the risk-sensitive Australian, New Zealand and Canadian Dollars, sending GBP/AUD, GBP NZD and GBP CAD higher.

Current Pound Sterling Exchange Rates
The Pound Sterling to Australian Dollar exchange rate is trading down -0.35% at 1.80642 GBP/AUD.
The Pound Sterling to Canadian Dollar exchange rate is trading down -0.03% at 1.82483 GBP/CAD.
The Pound Sterling to Swiss Franc exchange rate is trading down -0.03% at 1.50427 GBP/CHF.
The Pound Sterling to Euro exchange rate is trading down -0.03% at 1.23101 GBP/EUR.
The Pound Sterling to Japanese Yen exchange rate is trading down -0.11% at 171.31511 GBP/JPY.
The Pound Sterling to New Zealand Dollar exchange rate is trading down -0.36% at 1.97624 GBP/NZD.
The Pound Sterling to Turkish Lira exchange rate is trading down -0.15% at 3.52453 GBP/TRY.
The Pound Sterling to US Dollar exchange rate is trading up +0.02% at 1.67461 GBP/USD.
The Pound Sterling to South African Rand exchange rate is trading down -0.21% at 17.85215 GBP/ZAR.

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