Indian rupee depreciated 1.95% this week

Indian rupee depreciated 1.95% this week

21 Mar 2020 10:58 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee fell against the greenback for the fifth consecutive week, as rising safe-haven demand led to a sharp surge in the dollar index. The unit has depreciated 1.95% for the week, adding to an aggregate 5.4% fall in the past four weeks,The unit hit an all-time low of 75.30 this week. Rupee closed at 75.18 against the previous week close of 73.74.

India's foreign exchange reserves fell to $481.89 billion as of March 13, compared with $487.24 billion a week earlier, the Reserve Bank of India said on Friday. Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves.

Global Market

The dollar index is headed for its biggest weekly gain since the 2008 financial crisis, as financial volatility and worries over tighter liquidity conditions due to the coronavirus outbreak pushed investors into cash and cash equivalents, especially the dollar. The dollar index is up 3.4% for the week, its biggest weekly rise since October 2008. The index hit a three-year high of 102.99 earlier in the week. The dollar index closed at 102.40 against the previous week close of 98.46.

U.S. home sales surged to a 13-year high in February, but the housing market recovery is likely to be derailed by the coronavirus pandemic, The National Association of Realtors said on Friday existing home sales jumped 6.5% to a seasonally adjusted annual rate of 5.77 million units last month, the highest level since February 2007.

The number of Americans applying for initial unemployment benefits rose more than expected to 281,000 in the latest week from a revised 211,000 the previous week, the U.S. Labor Department said on Thursday, indicating that the coronavirus pandemic is starting to disrupt the U.S. labor market.

The U.S. current account deficit narrowed sharply in the fourth quarter, The Commerce Department said on Thursday the current account deficit, which measures the flow of goods, services and investments into and out of the country, dropped 12.4% to $109.8 billion last quarter.

German business morale plummeted in March to its lowest level since 2009, a preliminary survey showed on Monday, suggesting that Europe's largest economy is falling into recession due to the impact of the coronavirus. The Ifo institute said preliminary results from its March survey showed its business climate index slumped to 87.7 from 96.0 in February.

Britain created more jobs than expected in the three months to January but unemployment rose too by the largest amount since 2011, The number of people in work rose by 184,000 to 32.985 million, the Office for National Statistics said, But the figures also showed unemployment rose by 63,000 in the three months to January, the biggest increase since late 2011.

Japan's exports slipped for a 15th straight month in February as U.S. and China-bound shipments declined, suggesting a cooling of business activity in the world's third-largest economy due to the coronavirus outbreak. Ministry of Finance (MOF) data out on Wednesday showed Japan's exports fell 1.0% from a year earlier in February, dragged by U.S.-bound shipments of cars and metal processing machinery to China.

China said its industrial output, retail sales and fixed income investment all fell a lot more than expected at the start of the year. Industrial output plunged 13.5% year-on-year in January and February, compared to the  expected 3% contraction. Retail sales fell 20.5% in the period, versus a projected 4% fall. Fixed-asset investment dropped 24.5%, versus a forecast 2% decline. Meanwhile, the unemployment rate surged to 6.2%, the highest on record.

Local Market

Indian shares rally on friday, but suffer worst week since 2008. The Nifty 50 saw its best one-day gain on friday in more than six months, but ended the week more than 12% lower. Both Nifty and Sensex logged their worst week since 2008. Nifty closed this week at 8,745 while S&P BSE Sensex closed at 29,915.

India's market regulator on Friday halved position limits for certain stock futures, restricted short-selling of index derivatives and raised margin rates for some shares in a bid to curb "abnormally high" volatility amid the coronavirus pandemic. The measures SEBI come after markets around the globe have plummeted over the past week as emptying hotels and airports and closure of malls and offices threatened to bring the world's economies to a grinding halt.