The Pound has been able to rise considerably against the Indian Rupee today, though underlying concerns remain about the future of national inflation.
Pound Rupee Exchange Rate Rally Tied to INR Uncertainty; UK Inflation Concerns Remain
The Pound Indian Rupee exchange rate has risen by 0.5% today, printing at 58.82. This comes in spite of a negative response to the latest UK inflation and earnings outcomes.
November’s inflation rose above forecasts and October wage growth also increased, but this latter advance was not considered strong enough to outweigh the effects of higher inflation on the economy.
In terms of news from India, inflation has fallen on the year in November, while annual prices for manufacturing have risen in contrast.
While the cost of crude oil has recently dipped, the threat of a price rise remains a limiting factor for the Indian Rupee.
Future Pound Sterling Rupee Demand Tied to Further Evidence of UK Inflationary Pressures
The biggest story of the week so far, concerning the UK’s rising level of inflation, is expected to continue having a significant impact on the Pound in the short and long-term.
If the level of inflation in 2017 continues outstripping the slow pace of wage growth the Pound is likely to stumble against the Indian Rupee.
On the flip side, if the unexpected continues to happen and inflation slows while wages rise, then the negative impact of inflationary fears on the Pound is likely to be diminished.
Indian Rupee Pound Outlook: Rapid Economic Recovery in 2016 to Boost INR Demand
When looking for future influencers of the Indian Rupee Pound exchange rate, the general health of India’s economy is one of the key factors moving into 2017.
The nation has been undeniably unsettled by the abrupt shift from using old denominations of currency to new ones, which has led some parts of the country to grind to a halt.
With the deadline for exchanging old notes fast approaching, analysts have instead been looking to the future for signs of how the economy may fare in the coming year.
Among these has been Crisil Chief Economist Dharmakirti Joshi, who has ‘broadly’ estimated;
‘lower private consumption in fiscal 2017, but [for] demand to revive and growth to rebound in fiscal 2018. India should shortly revert back to an 8% annual growth trajectory’.
To summarise, if it looks like the Indian economy is going to bounce back from 2016’s late hurdle the Rupee can be expected to appreciate, while a longer-than-expected slump could limit INR appeal.
Recent Interbank Exchange Rates
At the time of writing, the Pound Indian Rupee (GBP INR) exchange rate was trending in the region of 85.77 and the Indian Rupee Pound (INR GBP) exchange rate was trending in the region of 0.01.