Indian Rupee depreciated 0.02 pct this week

Indian Rupee depreciated 0.02 pct this week

01 Feb 2020 05:46 PM

Weekly Synopsis

Indian Rupee

The local unit depreciated 0.02% this week. The pair USDINR closes at 71.34 against the previous weekly close of 71.3250 on January 24th, 2020 to a greenback. It trades in a weekly range between 71.17 to 71.6050 against the dollar.

India's foreign exchange reserves rose for the 18th straight week to a fresh record high of $466.69 billion as of the week ended Jan. 24, from $462.16 billion at the end of the prior week, according to central bank data released yesterday. The reserves gained $4.536 billion, logging its biggest rise since week ended on Sep. 27.The foreign currency assets stood at $432.92 billion against $428.45 billion in the previous week, the data showed.

The government's fiscal deficit touched 132.4 per cent of the full-year target at December-end mainly due to slower pace of revenue collections, official data showed on Friday. In actual terms, the fiscal deficit or gap between expenditure and revenue was Rs 9,31,725 crore, the data released by the Controller General of Accounts (CGA) showed.

Global Market

The dollar fell Friday, paced by losses against safe-haven currencies like the yen amid fears of a global pandemic as Chinese health authorities showed little sign they have a grip on the outbreak. The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.41% to 97.25.

Consumer outlays for goods and services, which account for about 70% of gross domestic product, increased 0.3% from the prior month after an unrevised 0.4% advance in November, Commerce Department data showed Friday. The report also showed income growth slowed to 0.2%, reflecting a decrease in farm subsidies, while the Fed’s favored core price gauge exceeded estimates with a 0.2% rise, the most since July.

The number of Americans filing for unemployment benefits fell last week. Initial claims for state unemployment benefits dropped 7,000 to a seasonally adjusted 216,000 for the week ended Jan. 25, the Labor Department said on Thursday. Claims data for the prior week was revised to show 12,000 more applications received than previously reported.

The U.S. economy missed the Trump administration's 3% growth target for a second straight year, posting its slowest annual growth in three years in 2019 as the slump in business investment deepened amid damaging trade tensions. The economy grew 2.3% last year, the Commerce Department said on Thursday. That was the slowest since 2016 and followed the 2.9% notched in 2018.

The Federal Reserve held rates steady on Wednesday, as the sluggish pace of inflation coupled with a strong labor market did little to shift the central bank's outlook on the economy. In a unanimous decision, the Federal Open Market Committee left its benchmark rate unchanged in the range of 1.5% to 1.75%.

New orders for key U.S.-made capital goods dropped by the most in eight months in December and shipments were weak, suggesting business investment contracted further in the fourth quarter and was a drag on economic growth. The Commerce Department said on Tuesday orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, fell 0.9% last month.

Sales of new U.S. single-family homes fell unexpectedly in December, likely held down by a shortage of more affordable homes, but lower mortgage rates supported the overall housing market. New home sales slipped 0.4% last month to a seasonally adjusted annual rate of 694,000 units, with sales in the South dropping to the lowest in more than a year.

German retail sales fell more than expected in December, data showed on Friday, suggesting that private consumption in Europe's biggest economy had run out of steam in the final month of last year. Retail sales fell by 3.3% on the month in real terms after a downwardly revised rise of 1.6% in the previous month, data from the Federal Statistics Office showed.

Confidence among British consumers in January touched the highest level since September 2018, bolstering other signs of a post-election bounce in the economy since last month's election, a survey showed on Friday. Market research firm GfK said its index of consumer confidence rose to -9 in January from -11 in December.

The Bank of England decided to keep its monetary policy on hold Thursday, its base rate staying at 0.75%, with members of the Monetary Policy Committee noting signs of improved sentiment within the economy versus a 1.4% drop in November.

Japan's household spending likely fell at a slightly slower pace in December as the effects of a nationwide sales tax hike ebb though shoppers may still cut back on consumption for some time. Following the tax hike to 10% from 8%, household spending tumbled 5.1% in October, its fastest pace of decline since March 2016, and fell 2% in November.

Japanese retail sales fell 2.6% in December from a year earlier, compared with a median market forecast for a 1.8% decline, government data showed on Friday.

Japan's factory output rose 1.3% in December, government data showed on Friday, compared with the median market forecast for a 0.7% gain. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to grow 3.5% in January and rise 4.1% in February, the data showed.

The first official indicator of the Chinese economy in 2020 signaled the nation’s factories were struggling even before the country shut down for the Lunar New Year holidays and the coronavirus outbreak worsened. The manufacturing purchasing managers’ index dropped to 50 in January, according to data released by the National Bureau of Statistics on Friday, matching the median estimate of economists. The non-manufacturing gauge was 54.1, compared with 53.5 the previous month.

Growth in China's factory activity faltered in January, an official survey showed, as export orders fell and an outbreak of a new virus added to risks facing the world's second-largest economy. The Purchasing Managers' Index (PMI) fell to 50.0 in January from 50.2 in December, China's National Bureau of Statistics (NBS) said on Friday.

Growth in China's services sector activity quickened in January, official data showed on Friday. The official services PMI rose to 54.1, from 53.5 in December, the National Bureau of Statistics said. The 50-point mark separates growth from contraction on a monthly basis.

Local Market

Indian shares were on downward side in the early days of week but stock market took a boost in the mid of week and ended higher on Friday, Indian shares gain 1%,post best week in six on rising risk settlement. The NSE Nifty 50 index ended 0.99% higher at 12,090.35 and the S&P BSE sensex was up 1.11% at 41,032.64 at the closing bell.

Finance stocks were the biggest drag on the bluechip indexes, with HDFC Bank Ltd and Housing Development Finance Corporation Ltd shedding 2.3-6%.  The Nifty Private Bank Index dropped 3.1%. Conglomerate ITC Ltd slumped 6.9% to its worst close since May 2016.