The Pound Sterling to Indian Rupee (GBP/INR) was little moved on Friday afternoon as positive data out of India lent support to the Rupee.
The Pound Sterling to Indian Rupee (GBP/INR) exchange rate was trading in the region of 99.1290 to 99.4460
The Rupee found support from government data which showed that consumer price inflation (CPI) in Asia’s third largest economy rose to 5.01% in May. A separate report meanwhile showed that industrial and manufacturing production beat economist forecasts, adding to signs that India’s economy is strengthening.
According to the Central Statistics Office, industrial production increased by 4.1% on a year-on-year basis, beating forecasts for growth of 1.5%. Industrial production on a monthly basis was shown to have increased 2.5% from the preceding month’s figure of 2.1%.
Manufacturing production meanwhile increased by 5.1% on an annual basis, with 16 of the 22 sub-sectors showing gains. The biggest improvement was seen in the machinery and equipment subgroup which surged by 20.6%. Mining output rose 0.6%, but electricity output eased 0.5%. The rise means that the sector improved at its best pace in
‘The IIP data although volatile, has been reflecting a recovery in Indian industrial activity. Since April 2014, IIP growth was negative only once, compared to 6 times in 2013-2014. This signals a healing process within the Indian economy. However, inflation has been sticky, making it difficult to pre-empt the monetary policy’s stance on rates,’ said Debopam Chaudhuri, chief economist at Zyfin Research.
Also supporting the Indian Rupee was data released by the Ministry of Statistics and Programme Implementation which showed that consumer price inflation in India rose from a four-month low in May.
CPI rose from 4.87% to 5.01%, just above the 5% forecast by economists. Food and beverages costs gained 5.13%; clothing and footwear prices climbed 6.12%. Housing and fuel and light charges advanced 4.64% and 5.96%, respectively.
‘Both the industrial production and CPI data augur well for the economy. The higher-than-expected data corroborates with the solid indirect tax growth figures released by the Finance Industry. The CPI data was better than what we expected. The last two readings have shown that food prices are not flaring up despite adverse weather conditions. This bodes well given the outlook for uneven monsoon distribution. While we still do not expect the RBI to cut rates anytime soon, this data has increased the odds for a rate move later in the calendar year,’ said an economist from ICICI Securities Primary Dealership Ltd.
The Indian is set to experience movement again next Monday as Indian WPI data is due for publication.
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