Although the majority of economists expected the Federal Open Market Committee to assert that the Fed would maintain the current level of asset purchases at its December meeting, the central bank opted to taper stimulus by 10 billion Dollars.
The Pound Sterling to Indian Rupee Exchange Rate was in the region of 101.9350 as of 10:30 GMT
Even those industry experts who foresaw a reduction in stimulus believed that easing would be trimmed by 5 billion Dollars, so this surprising result had extensive repercussions.
While the US Dollar broadly strengthened, emerging-market assets like the Rupee came under pressure and the currency posted widespread declines against the majority of its peers.
The Rupee was already feeling the pressure against the Pound as the British asset was bolstered by surprisingly strong UK employment figures, and the GBP/INR pairing consolidated gains overnight.
Although the FOMC attempted to take the sting out of the decision to taper stimulus by stressing its intention to keep borrowing costs at record lows for as long as possible, the Rupee still sank to a two-week low of 62.48 against its US counterpart.
The Pound Sterling to Rupee (GBP/INR) exchange rate hit a high of 102.4300
Losses were exacerbated as the Reserve Bank of India unexpectedly left interest rates unchanged.
Given India’s inflation issues it was believed that the repurchase rate would be increased from 7.75 per cent to 8 per cent, so the decision to leave it unaltered weighed on the Rupee.
As strategist Andy Ji notes, the RBI move ‘was a departure from Rajan’s hawkish and pre-emptive stance because they wanted to see how the Fed was going about tapering. Now the dust has settled somewhat’.
Ji believes that Rajan will increase borrowing costs in January.
During the European session Sterling received an additional boost in the form of a positive domestic retail sales report.
If tomorrow’s UK growth figures confirm that the nation’s economy expanded by 1.5 per cent in the third quarter (quarter-on-quarter) additional GBP/INR gains could occur before the weekend.
Current Rupee (INR) Exchange Rates:
< Down > Up
The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 101.9350 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 85.0175 >
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 62.2300 >
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 55.0665 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 50.9212 <
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 58.0909 >
(Correct as of 10:30 GMT)
Comments are closed.