Pound Indian Rupee (GBP/INR) Exchange Rate Steady as Reserve Bank of India Cuts Interest Rate

GBP/INR Exchange Rate Rangebound, RBI Cut Rates ‘Ahead of the Curve’

The Pound Indian Rupee (GBP/INR) exchange rate held steady today, with the pairing currently trading around ₹87.545 after the Reserve Bank of India’s (RBI) cut its repo rate from 5.40% to 5.15%.

Dr K Joseph Thomas, Head of Research at Emkay Wealth Management, was upbeat in his assessment:

‘RBI has once again proved to be well ahead of the curve in unleashing monetary efficacies to combat the economic slowdown, in perfectly complementing the fiscal initiatives, with the cut of 25 bps.’

The INR/GBP exchange rate held steady as Indian markets breathed a sigh of relief, with the new rate cut expected to offer more room for further easing and fiscal measures to revive growth in the flagging Indian economy.

Prakash Sakpal, an Economist at the ING Group in Singapore, commented:

‘I think [the RBI’s policymakers] have done enough and, given a considerable policy transmission lag, they should allow the easing so far to bear fruit. Or else, the authorities are running the risk of aggressive fiscal and monetary pump-priming eventually fuelling inflation.’

However, with the Indian economy particularly sensitive to global economic and political strains, the new front in the US trade war with the European Union has left many Indian Rupee traders jittery.

GBP/INR Exchange Rate Holds Steady, UK Markets Brace for EU Verdict on New Brexit Deal

The Pound (GBP) failed to gain on the Indian Rupee (INR) today as Prime Minister Boris Johnson’s outline for a new Brexit deal was met with criticism. The European Parliament described the proposal as not ‘even remotely’ acceptable, while Leo Varadkar, Ireland’s Prime Minister, was also critical, saying:

‘I don’t fully understand how we can have Northern Ireland and the Republic of Ireland in a separate customs unions and somehow avoid there being tariffs and checks and customs posts between north and south.’

Sterling traders now find themselves in a no-man’s land of speculation as they await a formal EU assessment of the Conservative Government’s proposed deal. Markets are likely to remain clouded in uncertainty exacerbated by Johnson’s insistence that the only alternative to his ‘final’ deal is no deal until the Union presents its verdict.

GBP/INR Outlook: Could Sterling Rise on UK-EU Brexit Compromise?

Sterling traders will be looking ahead to Tuesday’s UK BRC like-for-like retail sales figures for September, which are expected to stall at 0%.

Tuesday will also see Bank of England Governor, Mark Carney, deliver a Tokyo summit speech, with any dovish comments on the British economy likely to prove Pound-negative.

Meanwhile, Indian Rupee investors will be looking ahead to Wednesday’s M3 money supply figure for October. Any signs of improvement could buoy confidence in a recovering Indian economy and provide some uplift to the INR/GBP exchange rate.

However, Brexit developments will continue to drive the GBP/INR exchange rate next week. Should the EU and the Conservative Government show a willingness to compromise on the newly proposed Brexit deal, Sterling could rise.

David Moore

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