The Euro to Indian Rupee (EUR/INR) exchange rate rallied by around 1.14% on Wednesday afternoon.
Although Greece has fallen back into recession, and German growth data failed to meet with expectations, the shared currency strengthened on Wednesday. This can be attributed to positive Euro-area growth as a result of the European Central Bank’s (ECB) program of quantitative easing.
The Indian Rupee, meanwhile, softened versus the majority of its most traded currency rivals in response to rising crude prices. Additional losses can be attributed to speculation that the Reserve Bank of India (RBI) will cut rates before June’s policy meeting.
The Euro to Indian Rupee (EUR/INR) exchange rate is currently trending in the region of 72.8560.
Euro (EUR) Exchange Rate Forecast to Advance versus the Pound and US Dollar on Euro-Area Growth
Eurozone growth saw a 1% annual increase in the first-quarter, highlighting the positive impact of quantitative easing. The accelerated growth came even after German GDP cooled and Greece fell back into recession.
‘The Eurozone’s economic recovery firmed moderately in the first quarter,’ said Christian Schulz, senior economist at Berenberg Bank in London. ‘Strong tailwinds from cheap oil, a weaker Euro and a much more aggressive ECB helped across the currency area, while the Russian risk receded and Greece’s tragedy has not had a major impact outside Greece itself.’
The geopolitical tensions in Greece have far from abated, however, and the Euro is likely to resume bearishness once the positive growth figures have been digested. ‘Everything we hear on Greece is calculated optimism because nobody wants to take the blame for a potential exit,’ said Thomas Harjes, senior economist at Barclays Plc in Frankfurt. ‘Now it’s time for the Greek government to decide what they want to do.’
The Euro to Indian Rupee (EUR/INR) exchange rate dropped to a low of 71.6700 today.
Indian Rupee (INR) Exchange Rate Forecast to Soften versus the Pound and US Dollar amid RBI Rate Cut Speculation
Having avoided significant intervention after the Rupee slid to a 20-month low against the US Dollar, the Reserve Bank of India is likely to cut rates before the June policy meeting, in the view of many analysts.
This has seen the Rupee soften versus many of its major peers. ‘We are pencilling in a 25 bps repo rate cut by RBI on June 2 or even before that,’ State Bank of India (SBI) said in a research note. ‘We are convinced that retail inflation trajectory will be significantly benign on the back of a loss of purchasing power in rural economy,’ SBI said adding that ‘if inflation numbers stay below 5 per cent, there is an outside chance of an additional 25 bps cut.’
The Rupee also softened in response to rising crude prices. ‘Any recent Dollar weakness is very supportive for the market,’ said Myrto Sokou, senior analyst at Sucden Financial.
Euro to Indian Rupee (EUR/INR) Exchange Rate Forecast to Hold Gains as Oil Prices Rise
With an absence of domestic data to curb the trend, and with oil prices continuing to climb, the Euro to Indian Rupee (EUR/INR) exchange rate is likely to hold gains for the remainder of Wednesday’s European session.
Thursday will see heightened EUR/INR volatility with Indian Inflation and Manufacturing data due for publication. A lack of influential European economic data on Thursday ought to see Euro trade dominated by geopolitical developments.
The Euro to Indian Rupee (EUR/INR) exchange rate advanced to a high of 72.9540 today.
