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AUD to INR Exchange Rate Softens on Australian Dollar Overvaluation

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Having decided to continue with the benchmark interest rate of 2.50%, the Reserve Bank of Australia’s Governor Glenn Stevens attempted to talk down the ‘Aussie’ (AUD) which resulted in the softening of the currency versus the majority of its major peers.

The Australian Dollar to Indian Rupee exchange rate is currently trending in the region of 56.3409.

Monday saw the Australian Dollar soften against a number of its rivals after Chinese manufacturing failed to meet with the forecast figure.

The Chinese Manufacturing PMI was forecast to drop from 51.7 to 51.3, but the actual result showed a further decline to 51.1 in August.

‘Aussie’ standing wasn’t helped by Monday’s Australian domestic data releases. Whilst second quarter inventories registered a large gain over the previous figure and the forecast, Company Operating Profit, TD Securities Inflation and House Px all fell below the previous figures.

The Indian Rupee was still riding on a high on Monday from Friday’s Gross Domestic Product data.

The year-on-year Indian Gross Domestic Product was expected to have grown by 4.96% having registered a 4.6% growth previously. The actual data showed an unexpected growth of 5.7% which was the best figure since March 2012.

Such was the impact of the positive GDP data that a negative result from Indian Manufacturing PMI had little impact on the strength of the currency.

The Australian Dollar to Indian Rupee exchange rate has hit a low today of 56.2753.

Tuesday has seen a massive decline in sentiment towards the Australian Dollar after Reserve Bank of Australia Governor Glen Stevens reported that an overvaluation of the ‘Aussie’ has hampered economic growth.

Sally Auld, Sydney-based interest-rate strategist at JPMorgan Chase & Co. stated; ‘The comments mark a step up in the language the RBA has adopted on the Australian Dollar, and thus probably reflects some increased sensitivity to the widening divergence between the Australian Dollar and commodity prices.’

The Reserve Bank of Australia’s decision to extend the current interest rate of 2.50% is the longest pause in adjustment since 2006.

With nothing in terms of Indian domestic data publications on Tuesday the Rupee is likely to soften in anticipation of Wednesday’s Services PMI. The Services PMI is forecast to drop from the previous figure of 52.2 to 50.6.

Hopes for a reversal in fortune for the Australian Dollar rest on Wednesday’s key Gross Domestic Product data. The Australian Gross Domestic Product is forecast to grow by 3.0% having shown a 3.5% growth previously. The CEDA Function in Adelaide will also be of interest to those invested in the ‘Aussie’ as RBA Governor Glenn Stevens will be making a speech.

The Australian Dollar to Indian Rupee exchange rate has hit a high today of 56.5466.