Before the release of Indian industrial production data the Rupee was poised to record a modest 0.4 per cent five-day gain against the US Dollar and was stronger against the Pound.
With economists forecasting that the pace of industrial output in India increased in November the Rupee was buoyed against its rivals.
The Rupee was little affected by trade data showing that exports were up 6.8 per cent in December, year-on-year, following a gain of 5.9 per cent in November.
Imports plummeted by 15 per cent.
As strategist Jonathan Cavenagh noted; ‘There is positive sentiment for the Indian economy. The outlook is seen upbeat until general elections’.
Less-than-impressive construction, manufacturing and industrial production reports for the UK also weakened the Pound, helping the Rupee consolidate gains against its British rival.
However, the Rupee later reversed its advance as domestic factory output declined by 2.1 per cent instead of gaining the 0.8 per cent expected.
The surprising result follows a 1.8 per cent drop in October and was largely the result of a 3.5 per cent tumble in manufacturing production.
A 1 per cent gain in mining output prevented an even worse decline.
Before the data was published Reuters reporter Yati Himatsingka pointed out that even if the production data showed improvement, it would ‘not ease concerns as policymakers in Asia’s third largest economy grapple with slowing growth while also battling rampant inflation’.
Similarly, after the surprising fall in industrial output became known one Mumbai based strategist asserted ‘Industrial production data will continue to remain weak. Even though we have bottomed out, it is the recovery that we are worried about’.
Further GBP/INR movement could occur before the weekend as a result of the UK’s NIESR GDP figure for December.
If the report shows that UK growth faltered in December the Rupee could still end the week on a high against its British counterpart.
General Rupee volatility may also be inspired by the influential US non-farm payrolls report.
Next week Indian data to look out for includes Tuesday’s inflation figures.
Current Rupee (INR) Exchange Rates:
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The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 101.6010 <
The Euro/Indian Rupee Exchange Rate is currently in the region of: 84.1255 <
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 61.9025 <
The Australian Dollar/Indian Rupee Exchange Rate is currently in the region of: 55.0437 <
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 50.8220 <
The Canadian Dollar/Indian Rupee Exchange Rate is currently in the region of: 57.0215 <
(Correct as of 12:55 GMT)
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