Indian Rupee flat this week (05th Oct - 09th Oct)

Indian Rupee flat this week (05th Oct - 09th Oct)

10 Oct 2020 12:19 PM

Weekly Synopsis

 Indian Rupee

Rupee ended higher on Friday on likely overseas funds inflow into both local stock and debt after the Reserve Bank of India Governor Shaktikanta Das introduced measures to reduce borrowing costs without cutting the benchmark interest rate. For the week, Rupee traded between the range of 73.03 – 73.56 and closed at 73.13 compare to the previous week close of 73.14.

The India’s foreign exchange reserves rose by USD 3.618 billion to reach a life-time high of USD 545.638 billion in the week ended October 2, 2020, the RBI data showed. In the previous week ended September 25, the reserves had declined by USD 3.017 billion to USD 542.021 billion.

Global Market

The dollar fell to three-week lows on Friday on optimism that a deal for new U.S. stimulus would be reached, and as investors bet that Democrat Joe Biden is more likely to win the U.S. presidency and offer a larger economic package. The dollar index, which measures the greenback against a basket of major currencies was down by 0.7% this week and closed at 93.03.

The number of Americans filing new claims for jobless benefits inched down last week, signaling the U.S. labor market is making little fresh headway in getting millions of people back on the job after being out of work due to COVID-19 disruptions. Initial claims for state unemployment benefits totaled a seasonally adjusted 840,000 for the week ended Oct. 3, compared with an upwardly revised 849,000 in the prior week, the Labor Department said on Thursday.

The U.S. trade deficit surged in August to the largest in 14 years with imports climbing again, suggesting that trade could be a drag on economic growth in the third quarter. The Commerce Department said on Tuesday the trade deficit jumped 5.9% to $67.1 billion, the widest since August 2006.

U.S. services industry activity picked up in September, pulling above a level that prevailed before the COVID-19 pandemic struck the nation, amid increases in new orders and employment. The Institute for Supply Management (ISM) said on Monday its non-manufacturing activity index rose to a reading of 57.8 last month from 56.9 in August. That put the index just above its 57.3 level in February.

Britain's economy struggled to grow in August, setting back its recovery from the coronavirus lockdown, Gross domestic product rose by 2.1% from July, official data showed, not even half the median forecast in a Reuters poll of economists and the slowest increase since the economy began to recover in May from a record slump.

Investor morale in the euro zone has deteriorated in October, ending five consecutive monthly improvements, a survey showed on Monday, signalling concerns about rising coronavirus infections. Sentix's index for the euro zone fell to -8.3 from -8.0 in September, compared with a Reuters forecast for a reading of -9.5.

China returned from a week-long holiday with a bang, with the services sector remaining positive for a fifth consecutive month in September, helped by continuous recovery from the impact of COVID-19 in domestic supply and demand. The Caixin Services Purchasing Managers Index (PMI), released earlier in the day, rose to 54.8 in September, against August’s reading of 54.

Japan's inflation-adjusted real wages fell for the sixth straight month in August, reflecting a big drop in overtime pay due to the impact on the labour market from the COVID-19 pandemic, government data showed on Friday. Labour ministry data showed real wages, a key barometer of households' purchasing power, dropped 1.4% in August from a year earlier, following a downwardly revised 1.8% decline in July.

Local Market

Indian shares ended higher on Friday, led by bank stocks, after the central bank kept interest rates steady to counter a stubbornly high inflation, while unveiling steps to boost liquidity and lending in a pandemic-hit economy. The indexes added more than 4% this week. Nifty50 closed this week at 11,914 compare to the previous week close of 11,416.

The Reserve Bank of India (RBI) left key interest rates unchanged on Friday as widely expected, while keeping policy accommodative to help pull the coronavirus-ravaged economy out of its worst slump in four decades. As expected, the monetary policy committee (MPC) kept the repo rate, its key lending rate, at 4.0%, while the reverse repo rate or the key borrowing rate stayed at 3.35%.