Pound Rupee Exchange Rate (GBP/INR) Spirals As Indian Government Policy Fails

August 20, 2013 - Written by Toni Johnson

STORY LINK Pound Rupee Exchange Rate (GBP/INR) Spirals As Indian Government Policy Fails

Sterling registered strong gains again the Australian and New Zealand Dollars and the Indian Rupee during yesterday’s session. The positive move for GBPINR was particularly pronounced due to a perceived failure of Indian government policy.

The Pound Rupee exchange rate is currently trading up 2.41% % at 98.9304 GBP/INR. The Rupee Pound exchange rate is currently trading at 0.0101 INR/GBP.

Global appetite for risk continued to seep from the market during yesterday’s session, sending London’s FTSE 100 share index down by over half of a percentage point on the day, while on the other side of the Atlantic, New York’s Dow Jones index lost a similar amount during the session.

The shift out of risk-laden assets was partly driven by events in North Africa where violence between militants and the security services is threatening to spiral out of hand. The generalised shift out of risk by institutional investors sent the Pound Australian Dollar exchange rate (currency : GBP AUD) and the Pound New Zealand Dollar exchange rate (currency : GBP NZD) sharply higher on the day with GBP AUD climbing to close to 1.7200 and GBP NZD briefly breaking through the 1.9400 threshold.

However, by far the biggest mover during yesterday’s session was the Pound Indian Rupee exchange rate which gained over 2.5% to trade to within one rupee of the psychologically key 100:1 level. The pronounced forward move for GBP INR, which was languishing below the 85.0000 level as recently as the final week of May, has largely been triggered by market participants’ reaction to a perceived failure of the Indian government’s monetary policy.

India’s policymakers placed stringent controls on the amount of Rupees which could be taken out of the country by investors in an effort to curb the sharp losses which the local tender began suffering during the early part of the summer. Other measures from the Indian government included import duties on gold and a marked increase in the rate of interest charged by India’s central bank to retail banks for borrowing funds. Further losses seem likely for the Rupee in the near term, especially given the Indian tender’s positive correlation with risk sentiment.

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TAGS: Australian Dollar Forecasts Daily Currency Updates Indian Forecasts