The Pound has fallen considerably against the Indian Rupee during trading today, and may be in for further turbulence depending on the US’s economic positions.
The Rupee has rallied against Sterling and others, thanks to a slump in crude oil prices. This has come in spite of wider events in India, which have seen turmoil due to a snap currency decision.
Pound Sterling in Tenuous Position on Future UK-US Relations
The Pound has fallen by -0.7% against the Indian Rupee (GBP INR) and by greater amounts elsewhere at the start of the week, owing to growing concerns about what President-Elect Donald Trump will mean for UK trade.
While Trump has emphasised that he wishes to maintain the UK-US ‘special relationship’, it has been pointed out that the President-Elect has spoken against widespread trade deals, instead favouring US businesses where possible.
Elsewhere, Prime Minister Theresa May has been meeting with Indian officials to try and improve relations; further questions have been raised in this case about whether the UK eventually leaving the EU will place it in a weaker position when negotiating with India.
Monday has been a good start to the week for the Rupee, which has climbed by 0.9% against the Pound owing to falling crude oil costs.
Elsewhere in India, the banks remain under pressure from high demand for currency changing, which is required in the wake of the government disregarding 500 and 1000 Rupee notes.
This was done to force tax-dodging cash holders to deposit their funds in banks, which will then enable the authorities to track down tax evaders and charge them. Problematically, however, this has left countless businesses and low-income households in a difficult position due to most of their held money now being worthless for transactions.
Pound Sterling Forecast to Slump if PM May Wins December Article 50 Appeal
The Pound could be in for a considerable decline against the Rupee at the start of December, depending on how the Government’s Article 50 appeal plays out.
While the result of the appeal is not expected until early 2017, any sign that the Government could clinch a victory would also lead to fears of an accelerated timeline for triggering Article 50. This would likely soften Sterling against the Rupee considerably, given that investors appear to be hoping for as late an Article 50 trigger as possible.
Indian Rupee Outlook: Rapid Resolution to Currency Crisis could Boost INR Demand
The Rupee is expected to maintain its upward progress against the Pound as long as crude oil costs remain low, although the wider money supply issue might also have an impact moving ahead.
Given that the removed notes represented around 86% of all used currency in India, the banks have their work cut out to replace the high-value denominations without causing delays or further business interference.
If the Government’s plan appears to have worked and the tax coffers fill up in short order, then the Rupee is expected to appreciate due to the monetary hassle having being ultimately worth it.
Recent Interbank Exchange Rates
At the time of writing, the Pound Indian Rupee (GBP INR) exchange rate was trending in the region of 84.46 and the Indian Rupee Pound (INR GBP) exchange rate was trending in the region of 0.01.