Pound to Rupee Exchange Rate: GBP/INR News, Forecast and Outlook Today

December 18, 2014 - Written by David Woodsmith

STORY LINK Pound to Rupee Exchange Rate: GBP/INR News, Forecast and Outlook Today

Yesterday, the Pound Sterling (GBP) softened against the Indian Rupee (INR) on speculation that the central bank intervened in the currency markets to halt the Rupee’s rapid declines.

Earlier in the week, the Rupee slumped to a 13-month low against a number of major peers as concerns over global growth as weaker data out of China added to worries. Chinese factory output fell to a seven-month low in December.

Despite those worries, the Rupee managed to rally against the Pound and other currencies as speculation increased that the Reserve Bank of India had intervened in the markets. The Indian central bank refused to comment on the situation but rumours abound that state run lenders sold off US Dollars at the behest of the central bank.

Over the past two days, the Rupee tumbled by more than 2% as a broad sell-off of emerging market and perceived riskier assets increased on fears that Russia is facing an economic crisis and as commodity prices continued to decline.

‘Some nationalised banks were selling US Dollars, perhaps on behalf of the central bank, and that arrested the fall in the currency. Apart from that, there were exporters who took advantage of the weaker Rupee to sell Dollars,’ said Paresh Nayar, head of currency and money markets at FirstRand Ltd in Mumbai.

The Rupee’s gains are likely to be relatively short lived however, as market; attention turns to the upcoming US Federal Reserve policy meeting. Economists are speculating that the Federal Open Market Committee will choose to drop its vow to keep interest rates low for a ‘considerable time’ despite growing concerns over the situation in Russia and plunging oil prices.

The Pound regained some ground after data released by the London based Office of National Statistics (ONS) showed that UK unemployment fell in the three months through October and as basic pay increased more than inflation for the first time since 2009.

‘This is great news for consumer spending and highlights upside risks to growth next year. The gain in real incomes is going to get bigger and bigger from here,’ said Alan Clarke, an economist at Scotiabank.

Despite that positive data, the Pound remained softer against the Indian Rupee as Bank of England minutes showed that policy makers voted to keep interest rates at the record low level of 0.5% this month.

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