The US Dollar to Rupee (USD/INR) exchange rate may have trimmed some of its gains on Friday but the pairing is still trading above 60.0400 having advanced in response to Portugal-inspired risk aversion.
Over the past five days the USD to INR pairing has moved from lows of 59.64 to highs of 60.30.
The GBP to INR exchange rate has also experienced significant peaks and troughs, falling to a low of 102.14 and achieving a high of 103.13.
On Thursday the Rupee fluctuated as the impact of the new Indian Budget paled into insignificance in the face of major Portuguese banking concerns.
In the first budget since India’s new government came to power, Finance Minister Arun Jaitley attempted to demonstrate how committed the cabinet are to driving growth forward. The budget outlined both the government’s aim to restrain the deficit at 4.1% of GDP and the intent to implement a taxation regime which is both predictable and stable. To the distaste of a large proportion of the population, 33 million Dollars of the budget has been set aside in order to produce a mammoth stature of Indian Independence Leader Vallabhbhai Patel.
In the words of one resident; ‘How can they waste money on a statue like that? The government could have used that money to reduce the price of rice. That would have been some help for poor people like us.’
Both the good and bad points of the budget had little effect on the Rupee.
While the prospect of a more economically-secure India would usually drive the local currency higher, the appeal of emerging market assets like the Rupee faltered as shares in Portugal’s Banco Espirito Santo SA fell by as much as -17% as investors were spooked by the news of a banking debt default.
In the view of Mumbai-based industry expert Ankur Jhaveri; ‘The budget euphoria was washed away by concern surrounding the Eurozone. The Rupee can continue to remain under pressure on the back of weakness across Asian currencies and concerns surrounding the banking system in Europe.’
As the week has progressed the US Dollar to Indian Rupee exchange rate has advanced by 0.7%.
On Friday the appeal of the Rupee was also affected by India’s deposit growth and Industrial/Manufacturing production figures.
In a sign that the tide might be turning for India’s economy, both industrial and manufacturing production accelerated by more-than-anticipated in May.
On a year-on-year basis, industrial production was up 4.7% following an annual increase of 3.4% in April. A tamer increase of 3.6% had been anticipated. Manufacturing production was up 4.8% on the year. The increase in mining output was less impressive, coming in at just 2.7%.
However deposit growth climbed by 12.4% in June, year-on-year, down from the higher 13.9% reading recorded in April.
The GBP to INR exchange rate was down by 0.45% after the reports were published.
Next week movement in both the US Dollar to Rupee (USD/INR) and Pound to Rupee (GBP/INR) exchange rates could be caused by India’s Inflation Rate data.
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,102.6380,
US Dollar,,Indian Rupee,60.0100,
Euro,,Indian Rupee,81.5896,
Australian Dollar,,Indian Rupee,56.4035,
New Zealand Dollar,,Indian Rupee,52.9569,
[/table]
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