- Indian Rupee (INR) tanks as new daily covid cases top 168,000
- Domestic equities dive over 2% lower
- Pound (GBP) supported by strong fundamentals
- UK economy reopens today
The Pound Indian Rupee (GBP/INR) exchange rate is pushing sharply higher at the start of the new week. The pair gained 0.9% across the previous week, settling on Friday at 102.42 slightly down from the 5 month high of 103.08 reached earlier in the week. At 07:45 UTC, GBP/INR trades +0.3% at 102.79.
The Rupee trades sharply lower across the board as covid cases continue to rise exponentially. India reported a record 168,912 covid cases on Monday as it overtakes Brazil as the second worst hit country after the US. India’s overall tally for covid cases has reached 13.53 million against Brazil’s 13.45 million.
Concerns are growing that the resurgence in cases will derail India’s economic recovery. India is expected to record economic growth in the region of 11% as it recovers from the pandemic. However, the latest developments put such strong growth into question. The hardest hit state of Maharashtra is considering a lockdown. The economically significant state which is home to Mumbai will take a decision this week.
Domestic shares plunged lower as fears grow over outlook for the economy. The Nifty 50 index trades -2.4% whilst the Sensex trades 2.4% lower
The fundamental picture in the UK remains strong. Covid cases continue to decline in the UK with 1730 new daily cases on Sunday, a 25% drop from the previous week, whilst deaths fell to single digits.
The vaccine rollout programmes continues at a rapid pace in the UK, although concerns surrounding the AstraZeneca vaccine for younger people could slightly unnerve investors.
Today, the UK economy takes another important step towards the return to normality with all shops, hair and beauty salons and outside hospitality all re-opening. The markets will be watching covid developments closely as the economy re-opens
Attention will now turn to the UK GDP reading due on Tuesday. A stronger than forecast reading could boost the value of the Pound.