Indian rupee appreciated 0.06% this week

Indian rupee appreciated 0.06% this week

15 Feb 2020 04:56 PM

Weekly Synopsis

 Indian Rupee

The Indian rupee was little changed for the week as impact of debt-related foreign fund inflows after the monetary policy decision was offset by persistent rise in coronavirus cases from China.Rupee traded between the range of 71.40-71.65,it closes at 71.40 as compare to the previous week close of 71.45.

India's foreign exchange reserves rose for the 20th straight week to a fresh record high of $473 billion as of the week ended Feb. 7, from $471.30 billion at the end of the prior week, The foreign currency assets stood at $439.19 billion against $437.25 billion in the previous week, the data showed.

India’s trade deficit in January widened the most since June last year after shrinking annually for seven months in a row, as merchandise imports jumped to an eight-month high and exports fell, government data showed on Friday. Trade gap totalled $15.17 billion in January, stretching from December’s $11.25 billion and from $14.73 billion a year earlier.

Global Market

The US dollar index has risen to a fresh four-month high of 99.17  this week, surpassing the previous high of 99.11 reached on Thursday. The greenback continues to attract haven flows amid the signs of a slowdown in the Eurozone and increased fears of global growth slowdown due to coronavirus outbreak. Dollar index closed at 99.15 this week.

U.S. consumer spending slowed further in January, with sales at clothing stores declining by the most since 2009, a trend that could raise concerns. Data for December was revised down to show the so-called core retail sales rising 0.2% instead of jumping 0.5% as previously reported.

U.S. industrial production fell 0.3% in January, the Federal Reserve said on Friday. The Fed said manufacturing production fell 0.1% in January, matching forecasts, but December's manufacturing output was revised lower to a 0.1% gain from a previously reported 0.2% gain. Overall industrial output for December was revised downward to a 0.4% reduction from a previously reported 0.3% drop.

U.S. underlying consumer prices picked up in January, The Labor Department said on Thursday its consumer price index excluding the volatile food and energy components rose 0.2% last month after edging up 0.1% in December. The so-called core CPI was up by an unrounded 0.2423% last month. Underlying inflation in January was also lifted by increases, the core CPI increased 2.3%, rising by the same margin for four straight months.

The number of Americans filing for unemployment benefits increased less than expected last week, pointing to continued labor market strength that could keep the country's longest economic expansion on track. Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 205,000 for the week ended Feb. 8, the Labor Department said on Thursday. Claims fell in the prior week to 203,000, which was the lowest reading since November.

American households added $193 billion of debt in the fourth quarter, driven by a surge in mortgage loans, and overall debt levels rose to a new record at $14.15 trillion, the Federal Reserve Bank of New York said on Tuesday. Mortgage balances rose by $120 billion in the fourth quarter to $9.56 trillion, the New York Fed said in its quarterly report on household debt.

U.S. job openings dropped for a second straight month in December to hit their lowest level in two years, while hiring increased marginally. Job openings, a measure of labor demand, decreased 364,000 to 6.4 million, the lowest reading since December 2017, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS. The second straight monthly decline in job openings followed a 574,000 plunge in November, which was the biggest drop since August 2015.

Euro zone economic growth slowed as expected in the last three months of 2019 as gross domestic product shrank in France and Italy against the previous quarter, but employment growth picked up more than expected, official estimates showed on Friday. The European Union's statistics office Eurostat said GDP in the 19 countries sharing the euro expanded 0.1% quarter-on-quarter in the October-December period, as announced on Jan 31, for a 0.9% year-on-year gain - a downward revision from the previously estimated 1.0% growth.

A deep slump in euro-area industrial output at the end of last year highlights the scale of the challenge the sector will face in 2020. The 2.1% drop -- the steepest in almost four years -- will raise doubts about a meaningful rebound in momentum. The economy barely expanded in the fourth quarter and the outlook at the start of the year has been dented by the corona virus.

Investor morale in the euro zone fell for the first time in four months in February over fears that China will not be able to contain the corona virus outbreak, a survey showed on Monday. Sentix's index for the euro zone fell to 5.2 from 7.6 in January.

British house prices rose at the fastest pace in nearly three years last month, according to a closely watched survey that adds to signs of a rebound in consumer sentiment since December's election lifted some Brexit uncertainty. The Royal Institution of Chartered Surveyors' (RICS) monthly house price index surged to +17 in January from -2 in December, its highest reading since May 2017 and above all forecasts from economists in a poll.

Britain's economy flat-lined in the final three months of 2019. Official figures released on Tuesday showed zero growth in the fourth quarter compared with the third, matching the median forecast in a Reuters poll of economists. In annual terms, growth was 1.1%, stronger than the poll forecast of 0.8% after upward revisions to growth in some previous quarters. However, the last time annual growth was weaker for a calendar quarter was in mid-2012.

Britons kept a tight grip on their spending last month last month, a survey showed on Tuesday, suggesting that shoppers have not felt the jump in confidence reported by many companies since December's election broke the Brexit logjam. Total retail spending edged up by an annual 0.4% in January, the British Retail Consortium said. The average increase over the past 12 months was just 0.2%, the lowest since BRC's records began in 1995.

Japan's exports likely fell for a 14th straight month while machinery orders are expected to have dropped at the fastest pace in over a year, Exports are expected to have fallen 6.9% in January from a year earlier, after a 6.3% decline in December, the poll of 17 economists found. Imports likely slipped 1.3% last month, resulting in a trade deficit of 1.69 trillion yen ($15.44 billion), the poll showed, after a revised to 154.6 billion yen gap in December.

Japan’s economy likely suffered its biggest contraction since 2014 at the end of last year leaving it in a vulnerable state, as fallout from China’s viral outbreak threatens to turn a one-quarter-slump into a recession. A sharp drop in consumer spending after a sales tax hike is seen as the main culprit behind an annualized 3.8% contraction estimated by economists. The slide would be the worst for Japan since the second quarter of 2014, when a previous tax increase prompted the economy to shrink by 7.4%.

Auto sales in China are expected to fell for a 19th consecutive month in January, with the number of new energy vehicles (NEVs) sold contracting for a seventh month in a row, data from the country's biggest auto industry association showed on Thursday. Total auto sales in the world's biggest auto market are expected to fall 18% from the same month a year earlier, the China Association of Automobile Manufacturers (CAAM) said.

China's fiscal spending climbed 8.1% in 2019 from the previous year, the finance ministry said on Monday, outpacing economic growth as policymakers sought to ward off a sharper slowdown. Fiscal revenues increased an annual 3.8% last year, dragged by a 1.0% rise in tax receipts due to huge tax cuts, the finance ministry said a statement. Fiscal expenditures were 23.89 trillion yuan in 2019, while revenues were 19.04 trillion yuan, the ministry said.

Local Market

Indian shares has been volatile this week. It started with a positive view but ended flattish for the Nifty, while the mid-caps and small-caps closed negatively. The two factors which impacted the mood of the market were the novel corona virus and continued high domestic inflation. Nifty closed at 12,113 as comparison to the previous week close of 12,098. While Sensex closed at 41,257 as comparison to the previous close of 41,141.

India's supreme court ordered the telecom companies to clear nearly $13 billion in dues, which would add pressure on banks that are already exposed to nearly $140 billion of bad loans.