Indian Rupee Fell 1.1% This Week

Indian Rupee Fell 1.1% This Week

19 Jun 2021 12:29 PM

Weekly Synopsis

 Indian Rupee

The Indian rupee logged its worst weekly drop against the U.S. currency in over two months, tracking a sharp jump in the dollar index on indications that the Federal Reserve could raise interest rates earlier than previously expected. Local unit declined for the third straight week and fell 1.1%, its biggest weekly loss since Apr. 9. Rupee closed this week at 73.86.

India's foreign exchange reserves rose to $608.08 billion as of June 11, compared with $605.01 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 extended its advance against a basket of currencies on Friday, building on the gains logged after the U.S. Federal Reserve earlier this week surprised markets by signaling it would raise interest rates and end emergency bond-buying sooner than expected. Dollar Index gained this week almost 2%, its best weekly jump in about 14 months. Index closed this week at 92.32 compare to the previous week close of 90.51.

Factory activity in the U.S. mid-Atlantic region declined for the second consecutive month in June, The Philadelphia Federal Reserve Bank said its business activity index fell to 30.7 from 31.5 in May. That was just shy of economists' expectations for a reading of 31.0, according to an Economists poll.

Applications for U.S. state unemployment insurance rose slightly for the first time since late April, Initial claims in regular state programs increased by 37,000 to 412,000 in the week ended June 12, Labor Department data showed Thursday.

U.S. business inventories fell in April, with stocks declining at a sharper pace than initially estimated amid shortages of raw materials, which are undercutting production of motor vehicles and other goods. Business inventories decreased 0.2% after increasing 0.2% in March, the Commerce Department said on Tuesday. Inventories are a key component of gross domestic product. 

The euro zone's unadjusted trade surplus was almost five times higher in April than a year earlier, The European Union's statistics office said the unadjusted trade surplus of the 19 countries sharing the euro was 10.9 billion euros in April compared with 2.3 billion in April 2020, as overall euro zone exports rose 43.2% while imports increased 37.4.

British retail sales fell unexpectedly last month as a lifting of lockdown restrictions encouraged spending in restaurants rather than shops, according to official data. Retail sales fell 1.4% between April and May, the Office for National Statistics said.

Japan's exports rose at the fastest pace since 1980 in May and a key gauge of capital spending grew, helping the world's third largest economy offset sluggish domestic demand as COVID-19 vaccinations boost business activity in key markets. Ministry of Finance data on Wednesday showed exports grew 49.6% year-on-year in May, versus a 51.3% increase expected by an economists poll.

Growth in China's factory output slowed for a third straight month in May, likely weighed down by disruptions caused by COVID-19 outbreaks in the country's southern export powerhouse of Guangdong. Chinese industrial production rose 8.8% in May from a year ago, slower than the 9.8% uptick in April, National Bureau of Statistics data showed on Wednesday, missing a 9.0% on-year rise forecast by analysts from an Economists poll.

Local Market

Indian shares ended flat on Friday as losses in metal stocks cancelled out gains in financials, with the Nifty 50 and the Sensex marking their first week of losses in five as the U.S. central bank's hawkish turn weighed on equities. The Nifty 50 and the Sensex shed 0.73% and 0.25% for the week, respectively.

Foreign investors sold net $123.92 million of Indian shares on Jun. 17, according to data from the National Securities Depository Ltd. In June so far, these investors bought net $1.39 billion of Indian shares.