Indian Rupee fell 0.7% this week

Indian Rupee fell 0.7% this week

31 Oct 2020 12:34 PM

Weekly Synopsis

Indian Rupee

The Indian rupee logged its worst month against the U.S. currency in five, as the central bank moved aggressively to cap major upside in the local unit, while fresh lockdowns in Europe spooked investor appetite for risk assets. The rupee fell 0.7% this week, its biggest decline since the week ended Jul. 10. Rupee closed this week at 74.10 compare to the previous week close of 73.62.

India's foreign exchange reserves rose for the fourth straight week to hit a fresh record high of $560.53 billion for the week ending Oct. 23, from $555.12 billion in the prior week, the Reserve Bank of India said. The rise was mainly due to a jump in foreign currency assets that stood at $517.52 billion from $512.32 billion in the previous week.

Global Market

The greenback posted its largest weekly percentage gain since late September, with investors scooping up dollars due to fears of a contested election and the economic impact of renewed lockdowns in France, Germany and some regions of Spain. For the week, dollar index was up by 1.4% and closed this week at 94.02 against the previous week close of 92.73.

U.S. consumer spending increased more than expected in September, Consumer spending, which accounts for more than two thirds of U.S. economic activity, rose 1.4% last month after gaining 1% in August, the Commerce Department said on Friday. Economists polled had forecast consumer spending rising 1% in September.

The U.S. economy grew at its fastest rate since records began in the third quarter, reversing much - but by no means all - of the output lost in the second quarter under the impact of the coronavirus pandemic. The Commerce Department said gross domestic product grew at an annualized 33.1% in the quarter, after contracting by 31% in the second quarter. Analysts had expected an expansion of 31.9%.

Sales of new U.S. single-family homes unexpectedly fell in September after four straight monthly increases, but the housing market remains supported by record low mortgage rates and demand for more space as the COVID-19 pandemic drags on. New home sales fell 3.5% to a seasonally adjusted annual rate of 959,000 units last month, Economists polled by Reuters had forecast new home sales, rising 2.8% to a rate of 1.025 million units.

U.K. house prices posted their biggest annual gain since 2015 this month as a revival in the housing market defied a wider economic malaise. Values climbed 5.8% from a year earlier to an average of 227,825 pounds ($294,000), Nationwide Building Society said Friday. The report comes a day after Bank of England data showed mortgage approvals reached a 13-year high.

German business morale fell for the first time in six months in October, weighed down by companies' concerns about rising coronavirus infection rates that are making them more cautious about the coming months, a survey showed on Monday. The Ifo institute said its business climate index fell to 92.7 from a downwardly revised 93.2 in September. A Reuters poll had foreseen a decline to 93.0.

China's factory activity expanded at a slightly slower pace in October but was slightly above analysts' expectations, suggesting a continuing economic recovery as the country rebounds from the coronavirus shock. The official manufacturing Purchasing Manager's Index (PMI) fell to 51.4 in October from 51.5 in September, Analysts had expected it to slip slightly to 51.3 but said a broader recovery still appeared to be solidly on track.

Profits at China's industrial firms rose for a fifth straight month in September, but at a slower pace as factory-gate deflation and rising raw materials costs undercut a recovery in the manufacturing sector. Profits at Chinese industrial firms in September rose 10.1% year-on-year to 646.43 billion yuan ($96.34 billion). That marked the fifth month of profit growth albeit slower than a 19.1% increase in August.

Local Market

The benchmark BSE Sensex and the broader NSE index fell for the third straight day to close 0.34% and 0.24% lower, respectively, as fresh lockdowns in Europe hurt global economic recovery hopes and dented appetite for risk assets. This week the Sensex and the Nifty fell 2.6% and 2.4%, respectively, but rose 4.06% and 3.5% in October.

India's Reliance Industries posted a 15% drop in second quarter profit, as the decline in oil prices eclipsed the oil-to-telecom conglomerate’s gains in telecom and retail businesses. The Mukesh Ambani-backed company’s net profit for the quarter ended September stood at 95.67 billion rupees ($1.3 billion), compared with 112.62 billion rupees a year ago, it said in an exchange filing. Revenue fell 24% to 1.16 trillion rupees.