The Pound to Indian Rupee (GBP/INR) had no luck reclaiming lost ground in the rest of the session as UK politics continued to ripple through the market.Investors fear that if UKIP gain political power and the UK votes to leave the European Union, the power of the Pound Sterling exchange rate would be significantly damaged.
Strategist Kit Juckes commented: ‘A swing toward a party which is committed to leaving Europe and which could conceivably represent the balance of power is immensely significant. It will be perceived as adding to uncertainty about the UK’s membership of the EU. If the UK were to leave the EU, our view is that it would be negative for Sterling.’
UKIP Win Causes Pound Pressures and Waning Investor Sentiment
Earlier in the session… The Pound to Indian Rupee (GBP/INR) exchange rate has extended its losses in Friday’s European session as UK politics took a surprising turn.
Political party UKIP won another seat at a by-election showing that the face of UK politics is changing. Uncertainty over next year’s general election causes fluctuations in the Pound Sterling exchange rate which are likely to heighten the closer we get to May.
However, the win hasn’t g0ne down well with Prime Minister David Cameron who said: ‘I am absolutely determined to win this seas back at the general election because anything other than a Conservative government would put our recovery at risk and mean Ed Miliband in Downing Street.’
Earlier in the session… The Pound to Indian Rupee (GBP/INR) exchange rate softened on Friday despite favourable UK Public Sector Net Borrowing figures.
According to the Office of National Statistics (ONS), public sector borrowing showed some improvement in October which offered some hope for a faster budget repair ahead of May’s general election. The figure totalled -£7.706 billion in October from -£10.570 billion, falling 2.4% on the year.
Rupee Exchange Rate Weakens, Particularly versus the US Dollar (INR/USD)
This week, the Indian Rupee has been softer against other currency majors, and recently fell to a nine-month low of 62.22 versus the US Dollar (INR/USD). Since the fall the Rupee has been clawing back some ground against the ‘Buck’. The catalyst for such a fall has been attributed to the recent turbulence in the foreign exchange market.
The Japanese Yen (JPY) suffered from severe fluctuations and this had a domino effect in the market. The Japanese safe-haven currency fell dramatically this week, taking other Asian currencies down with it, after Japan slipped back into recession. Industry expert Greg Matwejev commented: ‘All Asian currencies are falling with the Yen, and that is driving what’s happening in Asia.’
Furthermore, the US Dollar has also caused market ripples after the US Federal Reserve confirmed it would begin hiking interest rates around the middle of 2015. Forex expert Geoff Kendrick stated: ‘The US Dollar, specifically the Dollar-Yen move, is accelerating more quickly than anyone though. There is no local logic [to the Rupee’s movement].’
With economists unsure of how involved the Reserve Bank of India (RBI) has been in the forex market, hypotheses have emerged. Some traders have suggested that the RBI may have stepped in to alter the market by selling US Dollars and purchasing Rupees.
The RBI commented: ‘We do not comment on day-to-day movement of the Rupee.’
Pound to Indian Rupee (GBP/INR) and US Dollar to Indian Rupee (USD/INR) Exchange rate Forecast
India’s Foreign Reserves figures are out on Friday, but are unlikely to cause Rupee movement. With domestic data thin on the ground, any fluctuations in the GBP/INR, USD/INR exchange rates will be largely dependent on global developments.
Looking ahead to next week, Monday will see the release of the US Markit Services Purchasing Managers Index (PMI) and Indian Current Account figures. Friday 28th November will be quite a significant day for the Indian Rupee exchange rate with the publication of Indian Deposit Growth, Foreign Reserves, Bank Loan Growth and Gross Domestic Product (GDP) Rate.
Indian Rupee (INR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,Indian Rupee, 96.8200,
US Dollar,,Indian Rupee,61.7900,
Euro,,Indian Rupee,76.8050,
Australian Dollar,,Indian Rupee,53.7200,
New Zealand Dollar,,Indian Rupee,48.5370,
[/table]
