Pound to Rupee Exchange Rate - Today's GBP INR Holds Gains; Indian Rupee Feels Coalgate

August 27, 2014 - Written by Frank Davies

STORY LINK Pound to Rupee Exchange Rate - Today's GBP INR Holds Gains; Indian Rupee Feels Coalgate

The British Pound to Rupee exchange rate (GBP/INR) trended positively over the latter part of this week, following the Indian Supreme Court’s statement that the coal mining licences given to steel, cement, and power businesses since 1993 have been deemed illegal in a state of affairs now labelled ‘Coalgate’.

The GBP/INR currency pairing may continue to gain in light of such an unstable fuel supply, whilst Sterling will find very little influence from domestic data releases this week.

The Coalgate Scandal and Effect on the Indian Rupee

The Rupee exchange rate will see the effect of the Coalgate scandal as the present situation leaves many in the steel, cement, and power sector wondering where the fuel they need for business will be attained from.

This instance will surely have an effect on the Indian economy, amid the new government’s attempts to enhance business and working situations; the effects could render licences invalid, or even impose restrictions on the mining. Coal-ministry representative P.C Parakh stated: ‘I’m sure the court is aware of the implications of cancellation on the economy.

The decision should be quick so that uncertainty goes away. Wholesale cancellations would send disturbing signals.’ September 1st will signal the continuation of a hearing as a decision on such matters.

The decision made will have an effect on the country as a whole, with Coal Minister Piyush Goyal stating: ‘I would look forward to finality in the matter of coal block allocations which have for several years now kept the sector in limbo and with the finality that one can expect very soon, I hope the sector can start progressing.’

The speculation surrounding the effect of cancellation or coal blocks appears extensive. The mass cancellation of fuel to power plants would cause a shortage, such a shortage would cause difficulties for India’s electricity supply which is fuelled by coal, and is responsible for over two-thirds of India’s electricity. Parakh continued: ‘A coal mine takes in our country anywhere between eight to 10 years to start operating. We are already in serious shortage of coal in the country. If these coal blocks are cancelled we will be at least five years behind in terms of production of coal, which can have serious implications for our power sector.’ With such uncertainty taking place in India, the Rupee has felt the negative effect and softened.

Friday will see the release of Indian Foreign Reserves, and Gross Domestic Product Growth Rate figures. GDP is expected to reach 5.3% in the second quarter year-on-year, in comparison to the previous quarter’s 4.6%.

Pound Sterling Trades Weakly in the Currency Market, RBS Fined for Poor Homebuyers Advice

The Royal Bank of Scotland has been fined £14.47 million following the revelation that the bank were issuing insufficient mortgage advice. The Financial Conduct Authority has stated that the Royal Bank of Scotland had ‘serious failings in their advised mortgage sales business’ in the period of June 2011 to March 2013. Furthermore they ‘failed to ensure that advice given to customers was suitable.’ This comes following a 2013’s accusation against the Royal Bank of Scotland for manoeuvring interest rates which resulted in a massive fine for the bank. The UK will see a quiet week by way of data releases with only the Consumer Confidence Survey and Nationwide House PX figures on Friday of any notable significance to the Pound’s exchange rate.

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