Indian rupee Steady this week

Indian rupee Steady this week

16 May 2020 11:12 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee was steady against the U.S. currency this week, as likely corporate dollar flows offset the impact of flagging risk appetite in the wider Asian region. The rupee closed this week at 75.56 against the previous week close of 75.54. The rupee was supported by dollar sales by foreign banks throughout the week, likely on behalf of their clients.

India's foreign exchange reserves rose for the second straight week to $485.31 billion as of the week ended May 8, the highest level since Mar. 6, and against $481.08 billion at the end of the prior week, the Reserve Bank of India said.

Global Market

The U.S. dollar rose on Friday to notch a 0.66% weekly gain as the threat of a second wave of coronavirus infections rattled investors as did a slew of bleak U.S. economic data. The dollar index ended this week on a upper side and closed at 100.36 against the previous week close of 99.74, second straight week of gains.

The Labor Department said on Friday in its monthly Job Openings and Labor Turnover Survey, that layoffs and discharges increased 9.5 million in March to 11.4 million, the highest since the government started tracking the series in 2000. In just over a month, the labor market has shifted from one of worker shortages to the worst since the Great Depression.

Lockdowns across the U.S. led retail sales to their deepest monthly fall on record in April, The Census Bureau said that retail sales fell by 16.4%, after a drop of 8.4% in March. That is considerably worse than the 12% fall expected ahead of time. The March drop was a tad less steep than the  initial estimate of 8.7%.

The number of Americans applying for initial unemployment benefits totaled 2.98 million in the week ending May 9, the U.S. Labor Department said Thursday, the smallest number since March but still far from signaling any meaningful turnaround in the labor market. While it was higher than forecasts of 2.5 million, it was down from 3.17 million in the prior week.

Prices paid to U.S. producers declined in April from a year earlier by the most since 2015, The producer-price index dropped 1.2% after a 0.7% increase in the year through March, Labor Department figures showed Wednesday. Compared with the prior month, the PPI decreased 1.3% in April, the most in data back to 2009.

Britain's economy shrank by a record 5.8% in March as the coronavirus crisis escalated and the government shut down much of the country, according to official data that point towards an even bigger hit to come. The monthly drop in gross domestic product was felt in almost all sectors - from the country's shuttered restaurants and bars to its building sites and factories - and was the largest since comparable records began in 1997.

British retail spending plunged by nearly a fifth in April as the government's coronavirus lockdown hammered the sector, and a broader measure of consumer spending tumbled by more than a third, surveys showed on Wednesday. The British Retail Consortium said its members reported a 19.1% drop in total sales last month compared with April last year, the biggest fall since it began its monthly index in 1995.

Euro zone industrial production suffered its steepest monthly fall on record in March as coronavirus containment measures severely hit activity across the single currency area, The European Union's statistics office Eurostat said industrial production in the 19 countries sharing the euro fell 11.3% month-on-month in March, the sharpest decline since records started in 1991.

China's monthly auto sales rose for the first time in almost two years in April, industry data showed, Auto sales in April hit 2.07 million units in the world's biggest car market, up 4.4% from a year earlier, according to data from the China Association of Automobile Manufacturers (CAAM).

Japan's wholesale prices declined at the fastest annual pace in nearly four years in April, The corporate goods price index (CGPI), which measures the price companies charge each other for their goods and services, slumped 2.3% in April from a year earlier, worse than a median market forecast for a 1.6% drop, BOJ data showed on Friday.

Local Market

Indian shares ended this week on a lower side, even government's economic package failed to impress. Investors already worried about rising coronavirus cases and poor earnings reports. The Nifty 50 ended this week 1.24% lower, its second straight weekly fall, and Nifty 50 closed at 9136.85.

Prime Minister Narendra Modi earlier this week announced a 20-trillion-rupee stimulus package to fight the coronavirus pandemic, which has brought the country under a lockdown since Mar. 25. As part of the package, three trillion rupees of collateral-free automatic loans will be given to businesses that include MSMEs. The credit facility, aimed at helping over 4.5 million businesses, will carry a 12-month moratorium on principal repayment, enjoy capped interest rates, and will have a tenor of four years, which can be availed until October end.