On a weekly basis Indian rupee slipped 1.75 pct

On a weekly basis Indian rupee slipped 1.75 pct

09 Aug 2019 06:36 PM

Weekly Synopsis


Indian Rupee

On a weekly basis, the rupee slipped 1.75%. The pair USDINR closes at 70.80 against the previous weekly close of 69.5850 on August 02nd, 2019 to a greenback. It trades in a weekly range between 70.1150 to 71.00 against the dollar.

India's industrial output grew 2% in June from a year earlier, government data showed on Friday. Analysts poll had forecast June industrial output growth at 1.5%. The cumulative growth in April-June over the corresponding period of the previous year was 3.6%.

India's foreign exchange reserves fell to $428.95 billion as of Aug. 2, compared with $429.65 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.

The Reserve Bank of India (RBI) lowered its benchmark interest rates for a fourth straight meeting on Wednesday with a slightly bigger than expected cut, underscoring its worries about India's near-five year low economic growth pace. The six-member monetary policy committee (MPC) cut the repo rate by an unconventional 35 basis points (bps) to 5.40%, just above a 25 bps cut predicted by 80% of the 66 analysts poll last month.

Global Market

The dollar was mixed within relatively narrow ranges on Friday, after the Chinese Yuan defied some weak factory gate inflation data to end the week on a stable note. The dollar index, which tracks the greenback against a basket of currencies, was effectively unchanged at 97.52.

The pound fell on Friday to match its lowest levels since January 2017 after data unexpectedly showed that British gross domestic product contracted in the second quarter for the first time since 2012. Economic growth fell at a quarterly rate of 0.2% in the three months to June, below all forecasts in a poll of economists. Year-on-year economic growth slid to 1.2% from 1.8% in the first quarter.

The  number of Americans filing applications for unemployment benefits unexpectedly fell last week. Initial claims for state unemployment benefits fell 8,000 to a seasonally adjusted 209,000 for the week ended Aug. 3, the government said. Economists polled had forecast claims would be unchanged at 215,000 in the latest week.

China reported on Thursday in Asia that its exports in July unexpectedly rose. U.S. dollar-denominated exports gained 3.3% from a year ago, custom data showed. That compares with an expected fall of 2.0%. Imports during the month fell 5.6%, compared with a forecasted 8.3% decline. The country’s trade surplus last month was $45.06 billion.

U.S. job openings and hiring fell in June. Job openings, a measure of labour demand, slipped by 36,000 to a seasonally adjusted 7.3 million in June, the government said in its monthly Job Openings and Labour Turnover Survey, or JOLTS. Since hitting an all-time high of 7.6 million in late 2018, job openings have been flat this year, suggesting some easing in labour market conditions.

Major British retailers reported the weakest July sales growth since records began more than 20 years ago on Tuesday. The British Retail Consortium, which represents major high-street chains and supermarkets, said annual total sales growth picked up to 0.3% in July after contracting by 1.3% in June and 2.7% in May.

Growth in the U.S. services sectors decelerated in July to its weakest level in three years as trade worries weighed on business orders and the outlook for the overall economy, a private survey released on Monday showed. The Institute for Supply Management (ISM) said its non-manufacturing activity index fell to 53.7 from 55.1 the month before. Analysts poll had forecast a reading of 55.5 for July. A reading above 50 indicates expansion in the sector.

Investor morale in the euro zone deteriorated in August to its lowest since October 2014, a Sentix survey showed on Monday, and it warned that a recession was bound to happen in Germany. The Sentix research group said its investor sentiment index for the euro zone dropped to -13.7 in August from -5.8 in July, far below the -7.7 analysts had forecast.

Britain's dominant services sector unexpectedly perked up in July, a major survey showed on Monday. The IHS Markit/CIPS UK Services Purchasing Managers' Index (PMI) rose to a nine-month high of 51.4 from 50.2 in June, above all forecasts in a Reuters poll of economists that had pointed to an unchanged reading.

Euro zone business growth hit a wall in July as demand crumbled, according to a survey which showed a deepening downturn in manufacturing is increasingly affecting the bloc's dominant services industry. IHS Markit's Euro Zone Composite Final Purchasing Managers' Index (PMI), considered a good measure of overall economic health, dropped to 51.5 in July from June's 52.2, moving closer to the 50 mark separating growth from contraction.

The U.K.’s dominant services industry unexpectedly grew at the fastest pace in nine months in July, but the expansion may not be enough to rescue the economy from stagnation. IHS Markit said its Purchasing Managers Index for the sector rose to 51.4 last month, the highest since October.

Oil prices rose on Friday, supported by expectations of more OPEC production cuts despite the International Energy Agency (IEA) reporting demand growth at its lowest level since the financial crisis of 2008. Brent crude futures were up 89 cents at $58.27 a barrel. West Texas Intermediate (WTI) futures were at $53.33 per barrel, up 79 cents.

Local Market

Indian shares ended higher on Friday led by autos and financial stocks, and recorded their first weekly gain since mid-July, after a report that New Delhi was re-thinking the tax surcharge on foreign portfolio investors (FPIs). The broader NSE index ended 0.7% higher at 11,109.65, while the benchmark BSE index closed up 0.68% at 37,581.91. For the week, the NSE index was up 1%, while the BSE index rose 1.25%, their first positive weekly close since July 12.

India may exempt FPIs from the controversial tax on high incomes, as Finance Minister Nirmala Sitharaman faces pressure to roll back the measures introduced during the last month. The Nifty auto index ended 1.99% higher and the financials index was up 1.54% at the closing bell. India bulls Housing Finance closed up 14.8%.