The British pound continues to decline against the Indian rupee in early trading on Wednesday, after losing 0.37% yesterday. GBP/INR is trading at 92.657, down 0.17% as of 6:40 AM UTC.
The rupee has been in a better position in the last two days on increasing US-China trade optimism. Besides, the People’s Bank of China (PBOC) lowered its benchmark lending rate earlier today, in line with analysts’ forecasts. The move is expected to drive the global economy, with India being a major beneficiary as it’s trade-reliant.
China’s so-called one-year loan prime rate (LPR) was cut to 4.15% from 4.20%, while the five-year LPR was reduced to 4.80% from 4.85%. The government wants to stimulate commercial banks to lend more to local businesses that struggle with a slowing economy.
India’s GDP Growth Likely Below 5% over the Last Quarter
Judging by larger timeframes, the Indian rupee has declined since the start of the month, as the economy cannot get back on track. The gross domestic product (GDP) had likely declined to a new low last quarter.
Economists at Nomura Holding, the State Bank of India (SBI), and Capital Economics cut their outlook for the quarter ended September to a range between 4.2% and 4.7%. In the three months through June, the Indian economic growth decelerated to 5%. Official data is scheduled for November 29.
Sonal Varma, Nomura Singapore’s chief economist for India and Asia, is predicting a 4.2% figure for last quarter. He said:
“We now believe GDP growth did not bottom in [the April-June period]. High-frequency indicators have plunged and domestic credit conditions remain tight amid weak global demand.”
Soumya Kanti Ghosh, chief economic adviser at SBI in Mumbai, is expecting a similar reading for the September quarter. He said that the central bank might cut rates again in an attempt to revive the economy. The Reserve Bank of India (RBI) has lowered interest rates five times since the start of the year.
Shilan Shah, Capital Economics Singapore’s senior economist for India, is more generous with his forecast of a 4.7% expansion. He said that the government’s easing measures were not enough to boost the economy.