Indian Rupee fell 0.4% this week

Indian Rupee fell 0.4% this week

24 Oct 2020 01:00 PM

Weekly Synopsis

 Indian Rupee

The Indian rupee logged its worst weekly decline against the U.S. currency in six on persistent dollar purchases by state-run banks to offset the impact of robust foreign inflows. For the week, the rupee fell 0.4%, its biggest decline since the week ended Sep. 11, and extending last week’s 0.3% fall. Rupee closed this week at 73.62 compare to the previous week close of 73.34.

India's foreign exchange reserves rose to $555.12 billion as of Oct 16, compared with $551.51 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 weakened slightly against a basket of major currencies on Friday amid uncertainty over a new round of stimulus ahead of the upcoming U.S. elections. For the week, dollar index was down by 1%, index traded this week between the range of 92.46 – 93.76 and closed this week at 92.72 against the previous week close of 93.69.

U.S. business activity increased to a 20-month high in October, but the pace of new business growth and new orders eased slightly amid the lingering COVID-19 pandemic and caution ahead of the Nov. 3 presidential election. Data firm IHS Markit said on Friday its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, rose to a reading of 55.5 this month. That was the highest since February 2019 and was up from 54.3 in September.

The number of Americans applying for initial unemployment benefits fell to 787,000 last week, the lowest since April, but remained at levels indicating that the recovery in the labor market is struggling for momentum as the coronavirus pandemic enters its first full winter. Economists had forecast a decline to 860,000. The prior week's figure was revised down to 842,000 from an initially reported 898,000.

U.S. homebuilding rebounded in September as the housing market continued to be the star of the economic recovery, driven by record-low interest rates and a migration to the suburbs and low-density areas in search of more room for home offices and schooling. Housing starts increased 1.9% to a seasonally adjusted annual rate of 1.415 million units last month, the Commerce Department said on Tuesday.

Britain's economic recovery has lost more momentum this month as a resurgence of the coronavirus pandemic hit businesses in the hospitality and transport sectors, a survey showed on Friday. An early "flash" reading of the IHS Markit/CIPS UK Composite Purchasing Managers' Index (PMI), a gauge of private sector growth, fell to a four-month low of 52.9 in October from 56.5 in September.

British consumer sentiment fell this month by the most since a slump at the start of the coronavirus pandemic as lockdown restrictions tightened across much of the country. The GfK Consumer Confidence Index tumbled to -31 in October, its lowest level since late May and down sharply from a nine-month high of -25 in September, as well as being below all forecasts in a poll of economists.

Japan’s key consumer prices fell at a slightly slower pace in September but failed to log gains for a sixth straight month with economists expecting worse to come over the coming months. A gauge of prices excluding fresh food fell 0.3% from a year earlier, largely reflecting the impact of government travel subsidies, following a 0.4% drop in August, the ministry of internal affairs reported Friday.

China's fiscal revenues grew 4.7% in the third quarter from a year earlier, reversing a 7.4% drop in the previous quarter, the finance ministry said on Wednesday, as the country's economic recovery picked up pace. China's economy in the July to September quarter expanded by 4.9% from a year earlier, weaker than analyst expectations but faster than the second quarter's 3.2% growth.

Local Market

Indian shares ended higher on Friday, driven by gains in auto stocks, while a 15 billion rupees investment from Walmart Inc's Flipkart pushed Aditya Birla Fashion and Retail up as much as 17%. For the week, both the indexes gained more than 1% each. Nifty50 closed this week at 11,930.35 compare to the previous week close of 11,762.45.

Foreign investors bought net $166.38 million worth of Indian shares on Oct. 22, according to data from the National Securities Depository Ltd. So far in October, these investors bought shares worth net $2.18 billion, the data showed.