A lack of market moving economic data for the world’s major economies led to light trading volumes in Monday’s session. The Pound Sterling was little changed against many of its major currency peers due to a lack of market moving domestic data. The GBP/INR exchange rate did however experience some movement because of data released in India.
According to Indian government data, consumer price inflation in the Asian nation slowed unexpectedly to its lowest level in three months. The CPI index slowed to 5.17% as food prices were shown to have moderated. Economists had been forecasting an annual rise of 5.5% and the figure was lower than the 5.37% recorded in February. Consumer food price inflation eased to 6.14% last month compared with February’s upwardly revised 6.88%.
‘Consumer price inflation unexpectedly dropped in March as concerns over the impact of heavy rains on food inflation proved unfounded. What’s more, core inflation remains low, and headline inflation is now comfortably below the Reserve Bank’s near-term target. This has raised the possibility of an interest rate cut outside the scheduled review cycle for the third time this year,’ said Shilan Shah, an Indian economist.
Against the US Dollar, the Indian Rupee weakened close to a two-week low due to increasing demand for the American currency from Indian importers. The US currency was supported on expectations that the Federal Reserve will choose to hike interest rates in the summer. Some economists had pushed back their expectations for a rate rise until late 2015 or early 2016 following the publication of weak employment data for March.
The ‘Greenback’ also received a boost from comments made last week by the presidents of the New York and Richmond Federal Reserve banks. The presidents made the case for the Fed to begin policy tightening as early as the summer.
Also weighing upon the Rupee were concerns over the strength of the global economy, which were raised after data out of China came in below forecasts. The export and emerging-market related currencies came under pressure after data earlier showed that China’s trade surplus narrowed to $3.08 billion in March from $60.60 billion the previous month. Analysts had expected the trade surplus to narrow to $45.35 billion last month.
The Indian Rupee exchange rate will likely experience further movement in Tuesday’s session due to the release of domestic Wholesale Price Inflation.
The GBP/INR exchange rate was trading in the region of 91.2480.