GBP/INR has failed to reverse the downtrend after several sessions of uncertainty. Currently, one British pound buys 93.823 Indian rupees, down 0.12% as of 6:25 AM UTC. Thus, the price has broken below 94.000 for the first time since June 1.
The sterling is supported by some fragile Brexit optimism and the reopening of more non-essential businesses amid the gradual lockdown easing. However, investors decided that the rupee has been slightly undervalued and pointed to recent indicators demonstrating that the Indian economy is reviving as well.
Yesterday, the Indian government said that that the economy had shown the early green shoots of recovery in May and June, citing high electricity and fuel consumption, an increase in financial transactions, and more active movement of goods.
The finance ministry revealed 14 indicators related to the services, manufacturing, finance, and agriculture sectors. The ministry concluded:
“Early green shoots of economic revival have also emerged in May and June with real activity indicators like electricity and fuel consumption, inter and intra-state movement of goods, retail financial transactions witnessing pick-up.”
The ministry added that the lockdown measures had severe negative effects. India imposed the social distancing measures in mid-March and started the relaxation at the end of May.
Independent analysts agree that there were signs of economic recovery, but they argue that activity maintained well below pre-lockdown levels.
IMF Expects India’s GDP to Contract 4.5% in 2021
Earlier today, the International Monetary Fund (IMF) said in its World Economy Outlook June update that the Indian economy would contract by 4.5% in the fiscal year 2021.
On Wednesday, local rating agency India Ratings & Research (Ind-Ra) projected the lowest economic growth in the country’s history, anticipating a contraction of 5.3% for the current fiscal year. This would be the sixth year of contraction in India’s history. The last such instance occurred four decades ago.
In the UK, a recent Reuters poll found that the economy was tumbling at the fastest pace in centuries, but it was ready to bounce back in the third quarter as more businesses reopen.
Local media also reported that Britain’s schools would not follow any social distancing rules when students return to their classes in September.