On a weekly basis Rupee gained 0.5% on strong inflows

On a weekly basis Rupee gained 0.5% on strong inflows

27 Sep 2019 06:41 PM
 

Weekly Synopsis

 

Indian Rupee

Indian rupee strengthened against the dollar this week, supported by strong inflows and on expectations of more inflows in the coming days, while a fall in crude oil prices also aided sentiment. The currency gained 0.5% this week after ended little changed last week. The pair USDINR closes at 70.5575 against the previous weekly close of 70.94 on September 20th, 2019 to a greenback. It trades in a weekly range between 71.1350 to 70.52 against the dollar.

India's foreign exchange reserves fell for the second consecutive week to $428.57 billion as of the week ended Sep. 20, from $428.96 billion at the end of the prior week, according to central bank data released today. The decline was mainly due to decrease in foreign currency assets, which fell to $396.67 billion from $396.80 billion in the previous week, the data showed.

Global Market

The dollar stood tall on Friday, holding near multi-week highs against most major currencies as heightened risks from political tensions to the Sino-U.S. trade war increased its safe-haven luster. The dollar index measuring it against a basket of currencies was up 0.1% near a three-week high of 99.146, and on track for its best week in a month.

The euro was hovering just above its new low for 2019 against the dollar on Friday, as concerns over growth and inflation kept the single currency on the defensive, as did a fresh wave of fear about a disorderly Brexit at the end of next month. The euro fell as low as $1.0905 overnight during Asian hours and is now down 4.6% against the dollar year-to-date.

The British pound fell around half a cent against the dollar and a little less against the euro after Michael Saunders, the chief hawk on the Bank of England’s Monetary Policy Council, said persistently high economic uncertainty warranted lower interest rates. He added the caveat that a no-deal Brexit may make this impossible.

Profits at China's industrial firms contracted in August, reversing the previous month's brief gain. Industrial profits fell 2% in August from a year earlier to 517.8 billion yuan ($72.59 billion), data released by the National Bureau of Statistics (NBS) on Friday showed. That compared with a 2.6% gain in July.

Contracts to buy previously owned homes increased more than expected in August as the housing market continues to enjoy an uplift from lower mortgage rates. The National Association of Realtors said on Thursday its pending home sales index rose 1.6% to a reading of 107.3. July's index was unrevised. Compared to one year ago, pending sales were up 2.5%.

The number of Americans filing applications for unemployment benefits rose moderately last week. Initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 213,000 for the week ended Sept. 21, the Labour Department said on Thursday. Data for the prior week was revised to show 2,000 more applications received than previously reported.

British consumer sentiment has fallen to a six-year low due to increased worries about job security and the impact trade tensions and political uncertainty will have on individuals' finances, a survey showed on Thursday. Market research company YouGov said its monthly consumer sentiment indicator, compiled with economic consultancy Cebr, dropped to 103.4 in September from 104.0 in August, its lowest level since May 2013.

U.S. consumer confidence fell by the most in nine months in September, far more than expected, as Americans' economic outlooks darkened in the face of the U.S.-China trade war, according to a private sector report released on Tuesday. The Conference Board, an industry group, said its index of consumer attitudes fell to 125.1, from an downwardly revised 134.2 the month before.

Home-price gains in 20 U.S. cities decelerated in July for a 16th straight month, as values proved still too elevated for buyers despite low mortgage rates. The S&P CoreLogic Case-Shiller index of property values increased 2% from a year earlier, the slowest since August 2012, according to data released Tuesday. Nationally, home-price gains remained steady, rising at a 3.2% pace.

A gauge of employment in U.S. service industries pointed to job losses for the first time in almost a decade, adding to signs of a cooling labour market. The preliminary IHS Markit services purchasing managers' index for employment fell to 49.1 in September, the lowest since December 2009, from 50.4 the prior month, according to data released Monday.

Oil prices fell on Friday and were heading for a weekly loss on a faster than expected recovery in Saudi output while slowing Chinese economic growth dampens the demand outlook. Brent crude fell 93 cents to $61.81 a barrel while U.S. crude slipped by 65 cents to $55.76. Both were down almost 4% over the week, representing WTI's biggest weekly loss in 10 weeks and Brent's biggest in seven.

Local Market

Indian shares closed lower on Friday, pressured by auto and metal stocks, as investors hoped for more stimulus to revive the economy. The broader NSE index ended 0.51% lower at 11,512.40, while the benchmark BSE index closed down 0.43% at 38,822.57.  For the week, however, the markets managed to end higher. The NSE index rose 2.11% and the BSE index gained 2.13%, their best week since week-ending May 24, mainly helped by the government's move to cut corporate taxes last week.

Bharat Petroleum Corporation Ltd clocked gains of 16.3% for the week, marking its best week since week-ending Jun. 6, 2014. India's Strides Pharma Science Ltd hit their lowest since March 2014 at 298.25 rupees, after the company halted sales of its heartburn drug Ranitidine in the U.S. market, as it conducts tests to identify possible cancer-causing impurities in the tablets. Meanwhile, Lakshmi Vilas Bank fell nearly 5% after Indian police opened a probe into the directors of the lender over misappropriating funds.