GBP/INR is back to growth after two bearish sessions. At the time of writing, one British pound buys 95.041 Indian rupees, up 0.53% as of 6:25 AM UTC. Yesterday, the price couldn’t break below a strong support level near 93.500 and bounced back. Currently, the pair is facing tough resistance near 95.000.
Judging by larger timeframes, GBP/INR has been moving sideways. The pair is now displaying the same rate as on April 1.
The rupee started to weaken today after India’s commerce department said that the country’s core sector output contracted by 6.5% in March. The economy is frozen amid the lockdown measures. The government is seeking to curb the spread of COVID-19. This is the worst performance of the essential infrastructure sectors since 2005. In February, the indicator rose 7.2%, the highest in 11 months. In annual terms, infrastructure industries rose 0.6% after 4.4% last year.
Aditi Nayar, principal economist at ICRA, said that the worst is about to come:
“The core sector contraction in March represents the worst performance in the current series, even though it is surprisingly not as deep as we had feared. With the lockdown in place throughout April, which is expected to have severely curtailed production in many core sectors, the contraction in core sector output is likely to worsen to alarming levels in that month.”
All Core Sectors Declined Except Coal
The index covers the production of crude oil, natural gas, coal, steel, cement, electricity, fertilizers, and refinery products. It has a 40.27% weight in the Index of Industrial Production.
Crude output fell 5.5%, natural gas 15.2%, steel 13%, cement 24.7%, fertilizers 11.9%, refinery products 0.5%, and electricity dropped 7.2%. Coal was the only industry that showed growth, increasing by 4%.
ICRA anticipates industrial output to have plunged 15-20% in March considering the decline in the core sector, auto production and non-oil exports.
The rupee is under pressure also because India has reported the higher number of new coronavirus cases in the last 24 hours, as 1,993 people were tested positive. Thus, the total number of cases surpassed 35,000, and the death toll reached 1,147.
