GBP/INR is surging in early trading on Monday. Currently, the pair is trading at 94.263, up 0.45% as of 5:10 AM UTC.
The rupee has been under pressure amid increasing oil prices, which affect Indian importers. Both WTI and Brent crude brands have increased by about 2%, with the latter exceeding the $70 level for the first time since May 2019.
Oil prices have extended their uptrend after US President Donald Trump threatened Iraq with sanctions amid tensions with Iran.
On Friday, oil quotations surged over 3% after a US airstrike killed a senior Iranian commander in Iraq.
Ayham Kamel, an analyst at Eurasia Group, said that the incident “will trigger a long cycle of regional escalation with significant risks to U.S. assets and Mideast energy infrastructure that nevertheless stop short of war.”
“But the risk of limited conflict is real. It would include substantial Iranian attacks on Gulf energy targets and direct naval clashes between the U.S. and Iran,” he added.
The rupee couldn’t be saved by India’s better-than-expected services data. Earlier today, IHS Markit said that the country’s services sector expanded to the highest level in five months in December. The services business activity index rose from 52.7 in November to 53.3 in December. This is the second-highest rate of increase in more than a year. The 50 mark separates expansion from contraction.
Pollyanna de Lima, Principal Economist at IHS Markit, commented:
“The news of sustained job creation, robust new order growth and a pick-up in business confidence suggest that expansion can be maintained in the early part of 2020.”