The Indian rupee fell to a 6 ½ year low against most of its counterparts yesterday, driving the pound to finish 2% higher against the currency.

Slower growth in Asia’s third largest economy,  political unrest and troubled public finances have all been blamed for the recent free fall on the Indian rupee. Also speculation has been mounting recently that the Reserve Bank of India may not intervene in the currency markets to support the ailing economy.

The Indian rupee fell to a 6 ½ year low against most of its counterparts yesterday, driving the pound to finish 2% higher against the currency.

Slower growth in Asia’s third largest economy,  political unrest and troubled public finances have all been blamed for the recent free fall on the Indian rupee. Also speculation has been mounting recently that the Reserve Bank of India may not intervene in the currency markets to support the ailing economy.

As well as a bleak fundamental picture being painted about the Indian economy, continued talk of the Federal Reserve tapering its quantitative easing programme, especially after Friday’s better than expected US job figures have, have also buffeted most emerging market currencies, such as the rupee and the Thai baht, with investors exiting funds from such currencies and seeking US returns.

With regards to the US economy, credit rating agency S&P revised its long-term outlook on the countries credit rating to stable from negative on account of its improving economic outlook and the recent strength of the US dollar.

Overnight data from Australia revealed that home loans in April fell to 0.8%, well below the March figure and below expectations of 2.1%. As a result the Australian dollar continued to weaken to its lowest level against the pound since September 2010.

The New Zealand dollar and the South African rand continued to weaken as well following the disappointing figures from China on Monday morning. As we speak GBP/NZD is at its highest since September 2012 and GBP/ZAR continues to make record highs.

Data from Japan revealed that the economy grew by 1% in the first quarter surpassing expected growth of 0.9%. The Bank of Japan also kept its quantitative easing programme unchanged prompting the yen to strengthen overnight.

Data released this morning from the UK has revealed that industrial production in April improved to -0.6% but manufacturing production fell to -0.5%, confirming that both sectors still remain in contraction.

Key Announcements:

15.00pm – GBP – NIESR GDP Estimate (3M) (May): Previously 0.8% growth.