Indian Rupee Fell 0.2% This Week (4th Jan - 8th Jan 2021)

Indian Rupee Fell 0.2% This Week (4th Jan - 8th Jan 2021)

09 Jan 2021 11:36 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee ended a seven-week gaining streak against the dollar, tracking a jump in long-term U.S. Treasury yields on bets of additional fiscal stimulus in a Democrat-controlled U.S. government. The rupee was quoted at 73.24 compared with 73.12 in the previous week. For the week, it fell 0.2%, the biggest fall since week ending Nov. 13.

India's foreign exchange reserves rose to $585.32 billion as of Jan 1, compared with $580.84 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 turned higher against a basket of major currencies on Friday after a dismal December U.S. payrolls raised expectations for further stimulus measures to prop up an economy battered by the coronavirus and its related government lockdown measures. For the week , index was down by 0.2% and closed this week at 90.06 compare to the previous week close of 90.26.

The number of people making initial claims for jobless benefits stayed roughly unchanged at the historically high level of 787,000 last week, according to figures released on Thursday by the Labor Department. That's fractionally below the 800,000 expected by analysts and down by 3,000 from the previous week's figure. The number of continuing claims fell by more than expected to 5.072 million from 5.198 million.

The United States' trade deficit surged to its highest level in more than 14 years in November as businesses boosted imports to replenish inventories, offsetting a rise in exports. The trade gap widened 8.0% to $68.1 billion in November, the highest level since August 2006.Imports jumped 2.9% to $252.3 billion. Exports rose 1.2% to $184.2 billion.

U.S. services industry activity accelerated in December, but surging coronavirus infections depressed employment, heightening the risk that the economy shed jobs for the first time since the labor market recovery from the pandemic started. The Institute for Supply Management (ISM) said its non-manufacturing activity index increased to a reading of 57.2 last month from 55.9 in November.

U.S. manufacturing activity picked up at its briskest pace in more than six years in December, extending a recovery in the factory sector that has spurred the strongest pricing environment for goods producers since 2011 as the coronavirus pandemic upends supply chain networks. IHS Markit said its manufacturing PMI climbed to 57.1 in December from 56.7 in November.

A closely watched index of growth in British manufacturing activity rose to its highest level in three years last month, as factories rushed to complete work before the end of the post-Brexit transition period on Dec. 31.The IHS Markit/CIPS manufacturing Purchasing Managers' Index (PMI) for December rose to 57.5 from November's 55.6, its highest since November 2017 and slightly above an initial flash estimate of 57.3.

German factories churned out more goods in December despite a stricter lockdown to head off a spike in coronavirus deaths in Germany.IHS Markit's final Purchasing Managers' Index (PMI) for manufacturing, which accounts for about a fifth of the German economy, rose to 58.3 from 57.8 the previous month.

Euro zone producer prices fell year-on-year in November because of a slump in energy prices, but fall was smaller than expected thanks to more expensive capital and durable consumer goods. Prices at factory gates in the 19 countries sharing the euro rose 0.4% month-on-month in November for a 1.9% year-on-year fall. Economists polled by Reuters had expected a 0.1% monthly rise and a 2.2% annual decline.

Japan's factory activity ended a record 19-month run of declines in December as output stabilised for the first time in two years, suggesting manufacturers are shaking off the negative impact from the coronavirus pandemic. Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 50.0 in December from the previous month's 49.0 and a preliminary 49.7 reading.

Activity in China's factory sector rose in December as its economy sustained its recovery to pre-pandemic levels, however, increasing cost pressures slowed the pace of expansion. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) fell to 53.0 from November's 54.9, with the gauge staying well above the 50-level that separates growth from contraction but missing expectations and easing to the softest pace in three months.

Local Market

IT services' stocks poweredIndian shares to record closing highs on Friday, as the sectorkicks off the third-quarter earnings season, with TataConsultancy Services set to report its results later in the day. The NSE Nifty 50 index closed up 2.3% at14,347.25 compared to 14,018.50 in the previous week and the benchmark S&P BSE Sensex gained 1.9% to 48,782.51 compared to 47,868.98 in the previous week.

Indian economy is estimated to contract 7.7 per cent in 2020-21 compared to 4.2 per cent growth in the previous fiscal, mainly on account of the impact of the COVID-19 pandemic. As per the first advanced estimates of the national income released by the National Statistical Office (NSO) on Thursday, there was contraction in almost all sectors with the exception of agriculture.