Indian Rupee was Flat this Week

Indian Rupee was Flat this Week

27 Mar 2021 12:36 PM

Weekly Synopsis

Indian Rupee

The Indian rupee ended largely unchanged this week against the U.S. currency, as greenback sales by exporters outweighed broader strength in the dollar, while traders expect the currency to depreciate in the coming month. The local unit was flat for the week, after rising by an aggregate 1.3% in the last three weeks. Rupee closed this week at 72.51.

India's foreign exchange reserves rose to $582.27 billion as on Mar. 19 from $582.04 billion at the end of the previous week. Foreign currency assets rose to $541.18 billion from $541.02 billion in the prior week while gold assets rose to $34.63 billion from $34.55 billion.

Global Market

The dollar hovered near its highest since November against major currencies on Friday, propelled by optimism over U.S. coronavirus vaccines and the economy, and rose to its highest against the Japanese yen since June. For the week, Dollar index rose 0.8% and ended this week at 92.70 against the previous week close of 91.94.

The number of Americans filing new claims for unemployment benefits dropped to a one-year low last week, Initial claims for state unemployment benefits tumbled 97,000 to a seasonally adjusted 684,000 for the week ended March 20, the lowest since mid-March. Economists polled had forecast 730,000 applications for the latest week.

U.S. factory activity picked up in early March amid strong growth in new orders, but supply chain disruptions because of the COVID-19 pandemic continued to exert cost pressures for manufacturers, which could keep inflation fears in focus. Data firm IHS Markit said on Wednesday its flash U.S. manufacturing PMI increased to 59 in the first half of this month from a final reading 58.6 in February.

Sales of new U.S. single-family homes dropped more than expected in February amid bitterly cold weather, which also weighed on activity in other parts of the economy last month. The Commerce Department said on Wednesday that new home sales plunged 18.2% to a seasonally adjusted annual rate of 775,000 units last month.

Euro zone business activity unexpectedly grew this month, a preliminary survey showed, but with much of Europe suffering a third wave of coronavirus infections and renewed lockdown measures, that may not last through April. IHS Markit's flash composite PMI, seen as a good guide to economic health, bounced above the 50 mark separating growth from contraction, to 52.5 in March compared to February's 48.8, its highest since late 2018.

Britain's jobless rate unexpectedly fell in the three months to January, a change that partly reflected people giving up their job hunt as lockdown measures tightened at the start of the year, official figures showed on Tuesday. The main jobless rate dropped to 5.0% in the three months to January from 5.1% in the final quarter of 2020, in contrast to forecasts in a Reuters poll for a small rise to 5.2%. None of the economists polled had expected a fall.

An expansion of Japan's factory activity gathered pace in March, a private sector survey showed on Wednesday, helped by the prospect of a global economic recovery as an increasing number of countries roll out COVID-19 vaccines. The au Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 52.0 in March from a final 51.4 in February.

Local Market

Indian shares closed higher on Friday, boosted by beaten-down financial stocks and a jump in shares of Tata Group companies after the country's top court ruled in favour of the autos-to-steel conglomerate. For the week, both the indexes fell more than 1%. The blue-chip NSE Nifty 50 index closed at 14,507.30 and the benchmark S&P BSE Sensex ended this week at 49,008.50.

India's top court backed the removal of Tata Group's former chairman Cyrus Mistry, whose family firm owns an 18% stake in the group holding company, Tata Sons. Shares of Tata Consultancy Services Tata Motors, Tata Steel , Tata Consumer and Tata Power rose between 1% and 7% after the verdict.