GBP/INR: Rupee Awaits a Sixth Rate Cut from RBI

0
94

GBP/INR edges up on Tuesday. Currently, the pair is trading at 92.823, up 0.19% as of 6:26 AM UTC.

The Indian rupee is under pressure amid declining sentiment on the global trade after US President Trump surprised everyone by imposing tariffs on imports from Brazil and Argentina.

The Asian currency is dragged down by domestic factors as well. The economy cannot revive despite the stimulating measures from the government. The Reserve Bank of India (RBI) is expected to cut its interest rate on Thursday. This would be the sixth time this year.

India’s economy grew at 4.5%

However, even that might not be enough to support an acceleration of the gross domestic product (GDP) growth. India’s economy grew by an annual rate of 4.5% in the three months to September. This was down from 7% last year. Thus, the economy is expanding at a sluggish pace that doesn’t generate enough jobs for the young generation.

While the government’s measures boosted demand, private investment growth has been stagnating.

Both the government and the RBI have to intervene in tandem with major reforms in order to save the economy. A recent Reuters survey showed that economists expected the RBI to cut its repo rate by 25 basis points to 4.90% at the Thursday meeting. The central bank might cut the rate by another 15 basis points next year.

24 out of 56 surveyed economists said that the rate cut would provide slight support to the economy. Over 30% of respondents expect no significant impact.

Anagha Deodhar, an economist at ICICI Securities in Mumbai, admitted that the RBI’s monetary policy had limited benefits in the current circumstances. She said:

Hence, fiscal policy will have to do the heavy-lifting to boost growth. Sector-specific measures and increased government spending could be the quickest way to boost growth in the near term.”

Elsewhere, the pound is supported by retail sales data. Earlier today, the British Retail Consortium said that shoppers increased the pace of their spending in November, excluding discrepancies caused by the Black Friday. The total retail spending dropped 4.4% in annual terms, according to data that includes the Black Friday period. However, adjusted sales increased by 0.9% year-on-year, which is the biggest increase since January.


Currencylive.com is a news site only and not a currency trading platform.
Currencylive.com is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on currencylive.com do not represent our views.