GBP/INR is ready to start an intraday uptrend after losing 0.61% on Monday. Currently, the pair is trading at 92.829, up 0.08% as of 5:40 AM UTC.
The pound is recovering on several positive UK data confirming an uptick in consumer confidence and on comments that Britain doesn’t need anything special from the trade deal with the European Union. Elsewhere, the Indian rupee is under pressure after rating agency Moody’s cut its outlook for India.
Moody’s reduced its growth forecast for India
On Monday, Moody’s reduced its 2020 growth forecast for India to 5.4% from 6.6% predicted earlier, suggesting slower recovery. The agency cited domestic factors but also mentioned the impact of the coronavirus outbreak. In the fiscal year 2021, the Indian economy is expected to grow by 5.8% versus 6.7% predicted earlier.
Moody’s said that India’s economy had slowed dramatically in the last two years. The February update of its Global Macro Outlook report reads:
“Among emerging market countries, we have materially revised downward our growth forecasts for India, Mexico and South Africa. In all four cases, the revisions reflect wholly domestic challenges, rather than external factors.”
Interestingly, Moody’s outlook is way below that of competitor S&P, which expects 6% growth in 2020 and 7% in 2021.
Moody’s said that credit impulse in the Indian economy had weakened last year, citing data from the Reserve Bank of India (RBI).
“Banks have been both unwilling to lend and to lower lending rates despite successive interest rate cuts by the central bank. With a weak economy and depressed credit growth reinforcing each other, it is difficult to envision a quick turnaround of either, even if economic deceleration may have troughed,” the agency noted.
Judging by indicators like the purchasing managers’ index, the economy might have stabilized this year. Last week, Indian finance minister Nirmala Sitharaman said there were green shoots of recovery.
The report stressed that an increase in domestic demand and revival of credit growth would be essential to supporting economic momentum. However, the agency added that the Union Budget 2020 didn’t comprise any leverages to address the drop in demand.
Moody’s anticipated more easing from the RBI, but this might be impossible if food prices continue to increase at such a high rate.