Pound to Rupee Exchange Rate Advances - GBP/INR Gains on Slowing Chinese Economy

December 10, 2014 - Written by James Fuller

STORY LINK Pound to Rupee Exchange Rate Advances - GBP/INR Gains on Slowing Chinese Economy

Currency News UK Brings You Our Pound Sterling vs Rupee Forecast and Exchange Rate News

The Pound advanced against a weakened Indian Rupee as demand for riskier emerging market assets fell due to concerns over a slowing Chinese and wider global economy and tumbling oil prices.

Against the US Dollar the Indian Rupee weakened to its lowest level in one and a half weeks and made a third day of declines.

Rupee Exchange Rate Forecast

The Indian currency is forecast to remain under pressure and range bound until the end of the week when the latest domestic consumer price inflation data will be published. So far, there has been very little in the way of Indian data to affect the exchange rate.

Also likely to weigh on the Rupee is action by oil importers and other overseas traders preparing for the end of the year by settling deals in foreign currency.

‘Upcoming month and quarter end demand for Dollars from banks and corporate would keep the Rupee weak,’ said Anil Bhansali, the vice president at Mecklai Financial.

Further gains for the Pound were somewhat restrained after a report released by the British Chambers of Commerce warned that an early interest rate could have negative consequences for the UK’s economic recovery. It cited the UK’s reliance on mortgages and consumer spending as the major causes for concern.

The BCC also cut its growth forecasts for the UK. It trimmed its expectations for the rest of this year from 3.2% to 3% and for next year from 2.8% to 2.6%.

"Downgrades to our growth forecast are a warning sign that we still face a number of hurdles to securing a balanced and sustainable recovery," said BCC director general John Longworth. He also warned that factors such as the weak Eurozone economy, slowing growth in emerging markets and political uncertainty in Ukraine and the Middle East were negatively impacting upon both business and consumer confidence.

A separate report released by the Office for National Statistics showed that the UK’s trade deficit narrowed from £2.8 billion to £2 billion in October, the lowest deficit recorded in seven months. Exports rose to £24.3 billion due to increased demand for silver goods from India. Despite the improvement, concerns remain over exports to Europe.

‘We don’t have to look far for the reason why exports are in decline. Most evident is the near-stagnation of economic growth in the Eurozone, alongside a similar near stalling of growth across the emerging markets. The hope is that, with ECB [European Central Bank] stimulus acting as a tailwind, economic growth should pick up in the Eurozone in 2015, boosting demand for UK exports,’ said Markit chief economist Chris Williamson.

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