- Pound Indian Rupee Exchange Rate Down as Indian Stocks Rally – Both major Indian indices showed at least a 1.5% increase since Friday.
- Heavy Monsoon Season Looks to Boost Indian GDP, Agricultural Output – Previous seasons have been lacklustre but forecasts show an intense monsoon season on its way.
- Pound Remains Weak from Commercial Property Fund Freezes – Last week’s events continue to weigh on the Pound.
- GBP/INR Forecast: INR set to Gain on Sterling, Bank of England (BoE) Expected to Cut Rates.
The Pound Indian Rupee exchange rate had fallen markedly over this morning’s session as rallying Indian stocks hoped to lure more foreign investors.
However, the news that Andrea Leadsom had dropped out of the Tory party leadership race, leaving Theresa May as the only contender for the position of Prime Minister has seen the Pound regain its ground.
With last week’s favourable US non-farm payrolls figures increasing optimism for the global growth outlook, Indian stocks showed notable increases. In turn, this brought INR the support the currency has been lacking since the announced departure of Indian central bank superstar Raghuram Rajan.
The Pound Indian Rupee exchange rate currently trades at 86.8550.
Pound (GBP) Sees Slight Jump from Andrea Leadsom Dropping out of Tory Leadership Race
Sterling endured an exceedingly rough five days last week but has seen even further deprecation on the whole today.
The Pound’s woes began once again as the Bank of England (BoE) released its semi-annual financial stability report last Tuesday. At a glance, the release made for grim reading as it outlined specific areas of concern for the post-Brexit economy. The report goes into depth on these specific areas before labelling the UK economic outlook ‘challenging’.
Immediately following the report’s release, the Pound posted significant losses, failing to stabilise until Friday due to the freezing of over half of the UK’s £25 billion commercial property funds.
A series of commercial property investment funds were forced to halt withdrawals in reaction to a surge in redemption demands from investors. In an effort to stem any further commercial property sector devaluation, the funds were frozen to give asset managers the time to sell the property at realistic prices as panicked investors flocked to secure their money.
If forced to sell the assets hastily, an increase in cheap commercial property could prove disastrous for the property sector.
As it came to light that Tory party leadership hopeful Andrea Leadsom dropped out of the race, it appears Theresa May is the only suitable candidate left standing. This development has already seen the Pound enjoy a marginal boost, but the longer term effect of the increasing political stability within the UK could be favourable.
Rupee (INR) Rallies as Improving Global Growth Sentiment Boosts Indian Stocks
Friday began a period of increased support for the Indian Rupee as favourable US data releases saw the global growth outlook repaired somewhat and British-Indian trade talks commenced in full.
Indian stocks turned almost bullish as the US non-farm payrolls report showed a 287,000 increase in new jobs, a sign that global growth may be less affected by the ‘Brexit’ than first thought. Both the benchmark BSE Sensex index and the wider Nifty posted substantial increases.
Additionally, the Indian monsoon season nears and with it the potential for an economic jolt for the country. As 80% of the entire year’s rainfall is experienced during the monsoons, a good season sees farm output increase, in turn boosting India’s GDP.
Pound Indian Rupee Exchange Rate Forecast to fall on Bank of England (BoE) Rate Cut
From the UK, the only impactful ecostats are all set for release on Thursday.
The BoE will be deciding on its benchmark rate and whether it needs to be cut to support the post-Brexit UK economy. Analysts are in general agreement that the central bank will elect to slash rates but are divided over to what end, with some expecting a 0.5% cut to 0% and others a -0.25% adjustment. Either way a cut will hurt the Pound, with a drop to 0% expected to cause significant depreciation.
Also released by the central bank will be its asset purchasing (quantitative easing) target. The Pound is also likely to be pressured lower if any adjustments are made in this area.
From India, tomorrow holds both year-on-year industrial and manufacturing production figures and annual inflation for June. Improved or better-than-forecast results could send the Rupee higher.
The rest of the week is filled with various Indian inflation ecostats. The country has been grappling with large inflation figures for some time now so any decrease in consumer price pressures could offer the Rupee some support.
However, if Theresa May can unite the divided Tory party and get the country behind her with adequate measures to help the economic recovery, the Pound Indian Rupee exchange rate could be expected to rally somewhat in the coming days.
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