Rupee Exchange Rate: GBP/INR at 1-Month Low on Positive Indian Data

March 12, 2015 - Written by Toni Johnson

STORY LINK Rupee Exchange Rate: GBP/INR at 1-Month Low on Positive Indian Data

The Pound to Rupee exchange rate slipped to a 1-month low as economic data out of the Asian nation came in stronger than expectations. An improvement in sentiment towards riskier assets was also supporting the INR and other emerging market assets. Indian Industrial production was shown to have strengthened by 2.6% in January beating economist forecasts for a rise of 0.65%.

Indian Rupee (INR) Exchange Rate Improves on Factory Orders

Data released by Central Statistics Office (CSO) showed that the Index of Industrial Production (IIP), showed that factory output grew by 1.1%.

For the April-January period of 2014-15, IIP grew 2.5% against the meagre rise of 0.1% seen in the same period of the last fiscal year.

The overall consumer goods output has declined by 1.9% in January compared to a dip of 0.5% in the same month last year. During April-January, the output of these goods contracted by 4.7% compared to a dip of 2.7% in the corresponding period last fiscal. Similarly, consumer durables output also contracted by 5.3% compared to a decline in production by 8.3% in the same month last year.

The US Dollar to Indian Rupee exchange rate today is converting at 63.64000 USD/INR.

In April-January, the output declined by 14.2% compared to a dip of 12.5% in the same period last fiscal.

‘Retail inflation has come in line with market expectations. We expect inflation to move in a narrow trajectory going forward and stay within the comfort zone of the RBI and the government. This would give the RBI adequate headroom to substantially cut policy rates in the next fiscal year, which will in turn facilitate revival of the investment cycle,’ said Angel Broking in a statement.

A separate report showed that India’s consumer price index showed that inflation rose to 5.37% in February, up from the 5.2% figure seen in the preceding month as the cost of food items such as beverages and vegetables increased. The inflation figure increased expectations that the Reserve Bank of India will raise interest rates over the coming months.

‘CPI is broadly in line with expectations. Food inflation seems to be bit higher than what we anticipated. However, that does not change the trajectory of overall inflation going ahead and we think the RBI’s goal of 6 percent by January will be achieved. We still expect RBI to cut the repo rate by 25 basis points by June before pausing. It is better not to come to conclusion on IIP (industrial output) data as this data will undergo a change in a few months’ said an economist from ICICI securities.

Following the release of the Indian data reports the Rupee advanced to a 6-day high against the US Dollar.

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