- Pound (GBP) underpinned by supportive Budget
- UK economy to recover faster than initially expected
- Indian Rupee (INR) rises despite risk off trade
- FDIs are net buyers
The Pound Indian Rupee (GBP/INR) exchange rate is extending losses for a second straight session. The pair settled -0.4% lower at 101.75 in the previous session after hitting a low of 101.46. At 07:45 UTC, GBP/INR trades -0.2% at 101.51.
The Indian Rupee is managing to extend gains from a second session despite a risk off mood in the market as rising US bond yields once again hit risk sentiment.
Riskier assets such as equities are out of favour whilst safe havens such as the US Dollar are on the rise.
Indian domestic equities are sliding with the Sensex and Nifty 50 both trading over 1% lower at the time of writing. Even so foreign institutional investors were net buyers in capital markets.
Oil prices are on the rise ahead of today’s OPEC meeting.
The Chancellor Rishi Sunak’s Spring Budget was supportive of Sterling. Rishi Sunak delivered what should be the final big spending budget to support the UK economy through the covid 19 crisis. The UK had the highest number of covid deaths in Europe and the hardest hit to the economy.
On a positive note, the rapid rollout of the vaccine means that the UK economy is expected to return to its pre-pandemic size by next summer, around 6 months earlier than initially forecast. The unemployment rate is expected to peak at 6.5%, below the initially expected feared 7.5%.
As expected, the Chancellor extended the furlough scheme from April to September, the British high street received a boost through extended VAT cuts and the stamp duty holiday has been continued to help home buyers.
However, Rishi Sunak also warned that there would be tax rises coming in order to pay for the huge covid spending.
The Chancellor announced an increase in corporation tax from 19% to 25% in 2023. This will mark the first rise in corporation tax in over 4 decades.
