Indian Rupee Appreciated 0.3% this week (8th Mar - 12th Mar 21)

Indian Rupee Appreciated 0.3% this week (8th Mar - 12th Mar 21)

13 Mar 2021 12:30 PM

Weekly Synopsis

Indian Rupee

The Indian rupee rose for 2 consecutive weeks as the US fiscal stimulus was signed into a law, boosting hopes of a quick economic recovery. Rupee closed at 72.78 compared to 73.01 in the previous week, rising 0.3% for the week. The pair rose to an intraday high of 72.63 yesterday but gave up gains on likely RBI intervention.

India's foreign exchange reserves fell for the first time in 3 weeks $580.30 billion as on March 5 compared to $584.55 billion at the end of the previous week. The drop was mainly due to a fall in foreign currency assets that fell to $539.61 billion compared to $542.62 billion in the prior week.

Global Market

Dollar increased on Friday following a jump in Treasury yields as the prospect of economies emerging from the coronavirus led lockdowns gave rise to inflation fears. The dollar rose 0.25% at 91.668 yesterday. The index ended the week against 0.3% lower compared to 91.949 in the previous week.

U.S. producer prices increased strongly in February, leading to the largest annual gain in nearly 2-1/2 years, but considerable slack in the labor market could make it harder for businesses to pass on the higher costs to consumers. Inflation is expected to accelerate in the coming months and exceed the Federal Reserve's 2% target, a flexible average, by April.

The number of Americans filing new claims for jobless benefits dropped to a four-month low last week as an improving public health environment allows more segments of the economy to reopen, putting the labor market recovery back on track. Initial claims for state unemployment benefits decreased 42,000 to a seasonally adjusted 712,000 for the week ended March 6, the lowest level since early November.

The U.S. core consumer price index, which excludes volatile food and energy costs, increased 0.1% from a month earlier and 1.3% from the prior year. The overall CPI rose 0.4% from the prior month and 1.7% from a year earlier, a Labor Department report. The CPI report showed prices of goods, excluding food and energy, declined 0.2% in February from a month earlier, the first decrease since May.

British consumers cut back heavily on spending as they spent a second month in a COVID-19 lockdown in February but confidence in the economy hit a 12-month high, payment card firm Barclaycard said. Spending on essential items grew 5.3% and online grocery shopping surged. But spending on non-essentials plummeted 22.1% with many businesses still closed.

Exports and imports from Britain to the European Union plunged during the first month of the country's new trade relationship with the bloc, according to data published yesterday with some heavy caveats. Britain's overall goods trade deficit, including non-EU countries, narrowed to 9.826 billion pounds ($13.70 billion) in January from 14.315 billion pounds in December.

Japan's economy expanded at a slower-than-initially-reported pace in October-December, with firms tightening spending on plant and equipment as the coronavirus pandemic clouded their business plans. The slower growth was mainly due to a sharper contraction in private inventories and capital expenditure expanding less than previously thought in the fourth quarter, even as exports remained solid.

Local Market

Indian equities gave up gains and closed lower on Friday amid a selloff in financial stocks as the US and Europe bond yields rose. The NSE Nifty 50 index rose 0.62% at 15,030.95 compared to 14,938.10 in the previous week while the S&P BSE Sensex rose 0.76% at 50,792.08 compared to 50,405.32 in the previous week.

India's retail inflation accelerated to a three-month high in February on higher fuel prices, which could challenge the central bank's accommodative stance and record-low key policy rates adopted to boost the pandemic-hit economy. Annual retail inflation rose 5.03% in February, up from 4.06% in January.