The Pound has flopped against the Indian Rupee of late, having previously risen due to hopes of a ‘Transitional Brexit’.
The Rupee has had a rough time of trading lately, mainly due to the country’s continuing cash crisis after a Government order to demonetize the 500 and 1,000 INR banknotes.
Pound Sterling Losses seen on GDP Stats, Rupee Instability Witnessed on Oil Prices
The Pound Indian Rupee exchange rate has fallen to 85.34 of late.
The latest UK data release has concerned the Q3 GDP growth rate second estimate, which has shown a forecast-meeting dip on the quarter and rise on the year in a repeat of initial estimates.
In the Rupee’s case, the INR GBP exchange rate has come in at 0.01 after the cost of crude oil’s latest price volatility.
While the cost of the commodity has recently dropped, Rupee investors have remained wary about committing to the currency, given the latest fluctuations caused on OPEC news.
Pound Sterling Rupee Rate Predicted to Drop if ‘Hard Brexit’ is Unavoidable
Demand for the Pound against the Rupee could slide considerably in the coming months, assuming that the odds of a ‘Hard Brexit’ rise during negotiations.
The likelihood of the UK being unable to retain single market access has been heightened lately by Maltese PM Joseph Muscat. Speaking on Friday, Muscat stressed that the EU is ‘not bluffing’ on the claims that UK single market access will be cut off if it the UK does not allow the free movement of EU citizens into the country.
If this matter is unable to be resolved, the Government may be left with no choice but to implement ‘Hard Brexit’, tearing the UK out of the single market and causing economic turmoil as a consequence.
Indian Rupee Outlook Dependent on Ability for Economy to Absorb Cash Crisis
The future performance of the Indian Rupee against the Pound is set to be dependent on the economy’s resilience to the latest high-profile shock.
This has been Prime Minister Narendra Modi’s efforts to claim back taxes from India’s primarily cash-based economy, by demonetising the 500 and 1000 Rupee notes. This has been done to force cash holders to swap out their now useless notes at banks, which will produce visible income figures that can be taxed.
While the benefits could include a massive windfall in Government revenue, the more pressing issue is that the Indian economy seems to have ground to a halt, as banks are inundated by the nation’s over 1bn population trying to change their cash for new denominations.
Speculating on the issue, Fitch Ratings Director of Sovereign Ratings Thomas Roomaaker stated that;
‘The impact on GDP growth is clearly going to be negative in the short run’.
Recent Interbank Exchange Rates
At the time of writing, the Pound Indian Rupee (GBP INR) exchange rate was trending in the region of 85.20 and the Indian Rupee Pound (INR GBP) exchange rate was trending in the region of 0.01.