While these are very early days for 2017, the Pound Indian Rupee exchange rate has not been disappointing to investors, having risen to a rate of 83.89 on Tuesday’s trading session thanks to an unexpected surprise from domestic data.
Fresh Indian economic news has been thin on the ground, leaving last year’s hangover of the cash crisis still negatively impacting INR demand.
Since the start of 2017, the Pound has fluctuated between 83.80 and 84.01 against the Rupee.
Pound Indian Rupee Exchange Rate Gains Recorded after Unexpected Manufacturing Boost
The Pound has been supported against the Indian Rupee today by December’s manufacturing PMI results, the only direct UK data out so far this year.
Forecasts had initially been for a stagnation in the key PMI result, which meant that the actual rise from 53.6 to 56.1 was an unexpected surprise that triggered a moderate GBP INR rally.
Elsewhere in the UK, forecasts for the future have not been too positive, with HSBC UK Economist Liz Martins stating that;
‘We think the uncertain reality will hit home [in 2017], with a fall in investment and slowdown in consumption as inflation erodes real wages’.
Indian Rupee Pound Exchange Rate Update: Cash Crisis Remains Limiting Factor on INR Demand
The Indian Rupee has been an undesirable prospect at the start of 2017, with the confusion of late 2016’s cash crisis limiting the appeal of the INR GBP pairing.
The crisis was triggered when the Government demonetised certain denominations of the national currency, which led to lengthy queues at banks as citizens struggled to exchange their funds before the deadline.
The plan, to increase government tax income via declared currency, was praised at first, but it remains to be seen whether the story will have a happy ending given the widely reported issues of cash shortages amid national queueing.
GBP/INR Exchange Rate Forecast
For the rest of this week, Pound Sterling/Indian Rupee exchange rate movement may occur as a result of the UK construction and services PMIs due out on Wednesday and Thursday, as well as the Indian services PMI expected early on Wednesday.
For the UK’s PMI offerings, both the high-impact construction and services stats are forecast to have risen in December, though not equally.
While services make up a more significant portion of the UK’s economic activity, a minor rise from 55.2 to 55.4 has been forecast compared to the expected construction increase from 52.8 to 53.2.
With the Indian Nikkei December services PMI, a rise from 46.7 to 48.2 has been forecast on the month, which would still indicate that the sector is in a state of contraction.
On a less concrete note, the Pound may be moved dramatically this week if the Supreme Court announcement on Article 50 is delivered. The Court has been deliberating on whether the Government can appeal and reclaim executive authority over triggering the UK’s exit from the EU; if the appeal is rejected, the Pound is likely to appreciate further against the Indian Rupee.