Although it opened the week on a low note due to a storm of unsettling EU Referendum comments, the Pound has since managed to consolidate gains against the Indian Rupee and a number of its other peers.
The Indian Rupee has generally been left out in the cold in terms of investor interest. In addition to the fluctuating price of crude oil, the Rupee has been unsettled by news of competition with China and a potential ‘digital divide’ emerging among India’s citizens.
Pound Boosted by Trade Deficit News
The most recent source of support for the Pound has also been something that could come back to bite it, the UK trade balance results for March.
In a supportive development, the UK’s sizable trade deficit was shown to have reduced between February and March.
Less helpful, however, was the long-term analysis of the figures as it identified an expansion of the deficit between the start of Q4 2015 and the end of Q1 2016.
It remains to be seen whether this fact will undermine the Pound’s performance in the near-future but for now, at least, Sterling has been able to advance on some technically positive news.
World Bank Suggests Future Imbalance between ‘Tech-Classes’
The appeal of the Rupee has been diminished of late, with a recent report from the World Bank on technology usage and availability in India doing little to enthuse investors about the current state of the Indian economy.
The gist of the WB’s report was that although technological advancement in India is high, the amount of the population with access to business and socially-supportive technologies, such as the internet, is very low. The WB said:
‘Adoption of digital technologies shows great variation within the country: very high for government and relatively low for businesses’.
Elsewhere, the plans by China to construct a ‘One Belt, One Road’ trade link out of the country has concerned Indian officials, due to the possible militaristic applications of such an expansive highway.
Meanwhile, the price of crude oil on the WTI index has been supportively falling recently, although the cost of Brent Crude has been rising.
GBP/INR Exchange Rate Forecast
For the rest of the present week, Pound Sterling/Indian Rupee exchange rate movement may occur as a result of tomorrow’s UK industrial and manufacturing results, Thursday’s Bank of England (BoE) interest rate decision and inflation report and Indian inflation data, as well as Friday’s Indian trade balance result.
Forecasts have been generally positive for the UK’s production results while a BoE interest rate freeze is expected. Annual Indian inflation is forecast to uptick while the Indian current account deficit is expected to widen.
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