- Indian Rupee (INR) extends looses for a fourth straight day
- Nomura cuts India’s GDP forecast owing to covid restrictions
- Pound (GBP) edges higher despite weaker inflation figures
- CPI rises +0.7% YoY vs 0.8% forecast
The Pound Indian Rupee (GBP/INR) exchange rate is extending gains for a fourth straight day. The pair settled 0.4% higher on Tuesday at 105.05. At 07:45 UTC, GBP/INR trades +0.1% at 105.19.
UK inflation data revealed than prices rebounded in March although were slightly weaker than expected. Inflation, as measured by consumer prices rose 0.7% year on year in March, up from 0.4% in February. However, this was still slightly short of 0.8% forecast.
Clothing and transport costs pushed CPI higher as businesses prepared for the end of lockdown and a potential jump in consumer spending.
The data comes hot on the heels of yesterday’s mixed UK jobs data. The UK unemployment rate unexpectedly declined in the three months to February to 4.9%, down from 5% in January and below the 5.1% that analysts had penciled in. However, the improved unemployment rate is most likely due to more people completely leaving the jobs market as the inactivity rate rose by 0.2%.
The Bank of England believes the unemployment rate will peak at around 6.5% as the government withdraws the jobs retention scheme across the summer. This is an improvement from a previously expected 7.5% unemployment rate forecast.
The Indian Rupee came has come under continued pressure as the covid situation deteriorates rapidly. The current covid storm is overwhelming the health system with hospitals expected to run out of oxygen on Wednesday.
The world’s second more populous country is currently the hardest hit by covid with over 200,000 new daily cases being reported since mid-April. Large parts of the country are now under lockdown restrictions which will hamper the country’s economic recovery.
Investment bank Nomura cut its expected GDP growth for the 2021 calendar year to 11.5% down from 12.4% owing to the covid spread and subsequent lockdown restrictions.
Analysts are saying that India needs to bring its covid cases under control to avoid further downgrading of GDP forecasts.