GBP/INR is advancing on Wednesday, driven by a series of positive UK economic data. Meanwhile, the rupee is under pressure amid weakening global trade optimism.
The pair is currently trading at 93.543, up 0.38% as of 7:15 AM UTC. Thus, the price has just updated the highest level since March of this year. Interestingly, the greatest part of the gain (over 30%) came in a span of several minutes starting from about 7:00 AM UTC. However, it is still unclear what drove the surge.
Up until several minutes ago, the price was moving in a sideways trend maintaining a bullish mood. The rupee was supported by India’s services sector data.
Earlier today, the services purchasing managers’ index (PMI), prepared by Nikkei and IHS Markit, rose to 52.7 in November from 49.2 in October, expanding at its fast pace since July. The dominant services industry has been supported by an increase in new business, the survey showed. Any reading above 50 suggests expansion while a result below that mark points to contraction.
Pollyanna De Lima, principal economist at IHS Markit, commented:
“The main positive to be taken from November’s survey was a renewed increase in new work, which provided the platform for growth of services activity and employment whilst resulting in an improvement in business confidence.”
The sub-index that monitors demand increased to 53.2 in November from 50.1 in October, pushing companies to accelerate hiring at the fastest pace in three months.
While India’s manufacturing and services sectors show some signs of revival, the World Bank said that the country would need to implement more measures besides the low corporate taxes to attract investors.
According to the World Bank, the current land and labor laws along with protectionist trade policies are impeding foreign investment in India.
World Bank economist Aaditya Mattoo explained:
“What inhibits are restrictive regulations which affect its land, labor, logistics and also its policies which affect trade and goods and services.”
India has implemented a series of measures to attract investors, which helped it jump 14 places to 63rd position in the World Bank’s ranking on ease of doing business. However, logistics costs are still way higher than in China and Bangladesh.