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Uncertainty about Accuracy of Brexit Reports causes GBP/INR Losses

The Pound has fallen heavily against the Indian Rupee on Tuesday’s afternoon session, owing to an alarming economic forecast from the OECD.

The organisation has downgraded its UK growth predictions for 2018 and 2019, clearly citing Brexit as the justification.

Even last week’s Office for Budget Responsibility (OBR) growth predictions were higher than the OECD’s projections, so this has been especially bad news for GBP traders.

(First published November 28th, 2017)

In the midst of Brexit news and Bank of England (BoE) reports, the Pound has made a minor decline against the Indian Rupee.

This decline could worsen in the future, depending on whether the government publishes full reports on Brexit impacts.

Eventual Reveal of Brexit Studies could Trigger GBP/INR Crash

In the future, the Pound could tumble against the Indian Rupee based on investigations into Brexit.

These investigations have been in the headlines recently, as members of the Brexit Select Committee have complained that the government has been editing its findings.

The reports detail the possible economic impacts of Brexit, but Brexit Secretary David Davis has defended their redacted nature by stating;

‘[I have] received no assurances from the [Brexit] committee regarding how any information passed will be used’.

Davis’ potential concern is that if the findings are unduly negative, making them public could lead to a loss of national morale or weaken the UK’s position in Brexit talks.

Regardless of this possibility, there have been serious questions asked about why the reports are not being published in full.

Voicing her concerns over the possible manipulation of findings, Labour MP Seema Malhotra said;

‘It seems like the government has already decided what should and should not be seen by editing them before sending the impact studies to the Select Committee’.

Pat McFadden, another Labour voice on the matter, added;

‘Unless the government has a very convincing reason to withhold something, my instincts are that it should be made public

There’s a big difference between information which is politically embarrassing and information which genuinely is not in the national interest.

I am highly sceptical of about the accusation that anyone asking serious questions about the issues on Brexit is undermining our negotiating strategy’.

If the full reports ever materialise and are strongly critical of Brexit, then the Pound could tumble.

There is already growing sentiment that Brexit may not be all that was promised, but an official confirmation could still severely damage the Pound.

Indian Rupee Outlook: Are RBI Interest Rates Unsustainable?

The Indian Rupee might be affected by the actions of the Reserve Bank of India (RBI) in the future, depending on analysis of RBI interest rates; the RBI’s interest rate is currently at 6%.

This seems an eye-watering amount compared to the rest of the world, but is actually the lowest reported rate in almost seven years.

The concern, however, is that this might still be too high to enable Indian economic growth.

Commenting on the issue, Economic Advisory Council member Surjit Bhalla has warned;

‘I think that the RBI’s [monetary] policy is [uncompetetive] and [against the] competitive nature of the Indian economy.

I think it is destroying competitiveness in India by having [these high interest] rates.

I hope that they look at the numbers and come to the right conclusion, which is that interest rates in India are way too high by any sense of the term’.

Lower Indian interest rates might inspire a Rupee to Pound advance, particularly if traders believe this is for the good of the economy.

Recent Interbank GBP INR Exchange Rates

At the time of writing, the Pound to Indian Rupee (GBP INR) exchange rate was trading at 85.7703 and the Indian Rupee to Pound (INR GBP) exchange rate was trading at 0.0116.