Pound Sterling to Indian Rupee Exchange Rate Softens despite Steady Crude Price Rise

April 2, 2015 - Written by Frank Davies

STORY LINK Pound Sterling to Indian Rupee Exchange Rate Softens despite Steady Crude Price Rise

The Pound Sterling to Indian Rupee exchange rate softened by around -0.19%. After the Office for National Statistics (ONS) stated that the British workforce productivity was at its lowest level since the Second World War, the Pound softened versus the majority of its most traded currency rivals. The Indian Rupee, meanwhile, strengthened despite crude prices rising, albeit steadily. The Rupee appreciation can be attributed to speculation that the Reserve Bank of India (RBI) will avoid cutting its benchmark rate during next week’s policy meeting. The Pound Sterling to Indian Rupee exchange rate is currently trending in the region of 92.2920.

Investor confidence in the British asset has suffered considerably under the weight of political uncertainty. The forthcoming general election is considered by many to be the most hotly contested in modern political history, and the likelihood of a hung parliament is causing many to speculate that the UK will undergo significant policy change. Additional Sterling declination can be attributed to the ONS reporting that British productivity was at an ‘unprecedented’ level of weakness. ‘These estimates show that the absence of productivity growth in the seven years since 2007 is unprecedented in the post-war period,’ the ONS said. ‘Productivity [growth] has still not even returned to its long-run average rate of about 2%, let alone recouped any of the shortfall relative to its pre-crisis trend,’ said Vicky Redwood, UK economist at Capital Economics.

The Pound Sterling to Indian Rupee exchange rate has fallen to a low of 91.8920 today. With crude prices showing a fractional recovery, after Iranian nuclear talks are dragging on far beyond original expectations, the Rupee had the potential to soften versus its major peers. However, the Rupee strengthened versus most of its major currency rivals in response to speculation that the RBI will avoid another cut to the lending rate during the next policy meeting. Most now expect the central bank to cut the cash rate in June. ‘We see room for another 25 basis point cut by June and pause thereafter, set against the likelihood of US rate hikes in the second half of 2015, a narrowing output gap and our in-house expectations for gradual rupee depreciation in the quarters ahead,’ said Radhika Rao, economist at DBS.

Pound Sterling to Indian Rupee Exchange Rate Forecast to Hold Losses: Although crude prices aren’t showing any sign of resuming depreciation, the weight of political uncertainties is likely to continue to weigh on the British asset until the general election has concluded. Thursday is likely to see heightened GBP/INR volatility with Indian Manufacturing and UK Construction data due for publication. The Pound Sterling to Indian Rupee exchange rate climbed to a high of 92.8660 today.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Rupee Forecasts