On A Weekly Basis Rupee Gained 0.76% On Foreign Fund Inflows

On A Weekly Basis Rupee Gained 0.76% On Foreign Fund Inflows

29 Jun 2019 01:14 PM

Weekly Synopsis


Indian Rupee

The Indian rupee ended at 69.0150 per dollar, highest since Apr. 11 against 69.06 at previous close, amid hopes of likely foreign fund inflows. The currency gained 1% in June, rising for the first time since March, while on a weekly basis it was up 0.76%, logging its best week in five. The currency rose 0.2% in April-June. It trades in a weekly range between 69.6350 to 68.87against the greenback.

The benchmark 7.26% bond maturing in 2029 ended higher at 102.63 rupees, yielding 6.88%, against 102.50 rupees and 6.90% yield at previous close, as traders added positions tracking gains in the local currency. The benchmark yield fell 15 basis points in June and 47 basis points in April-June quarter.

Global Market

The dollar index fell 0.01% against a basket of major currencies and was set to turn in its weakest monthly performance since January 2018 as anticipation of a Fed rate cut has pushed the index down about 1.7% this month. Trump and Xi will meet during a Group of 20 summit this weekend in Osaka, Japan, for talks that could help resolve a yearlong trade war between China and the United States.

Sales of new U.S. single-family homes unexpectedly fell for a second straight month in May, suggesting lower mortgage rates had yet to provide a boost to the struggling housing market. The Commerce Department said on Tuesday new home sales dropped 7.8% to a seasonally adjusted annual rate of 626,000 units last month, the lowest level since December.

U.S. June consumer confidence fell more than expected, hitting its lowest level since September 2017, according to a private sector report released on Tuesday. The Conference Board, an industry group, said its index of consumer attitudes fell to 121.5, from a downwardly revised 131.3 the month before.

New orders for key U.S.-made capital goods rose more than expected in May and shipments increased solidly, suggesting some stabilizing in business spending on equipment after it fell early in the year. A closely watched proxy for business spending plans, increased 0.4% last month amid increases in demand for machinery, and computers and electronic products.

Filings for U.S. unemployment benefits increased by more than expected to a seven-week high, a possible sign of strains in the labor market that could factor in to the Federal Reserve’s debate over whether to cut interest rates next month. Jobless claims rose by 10,000 to 227,000 in the week ended June 22, according to Labor Department figures released Thursday.

U.S. economic growth accelerated in the first quarter, the government confirmed on Thursday, but the export and inventory boost to activity masked weakness in domestic demand, some of which appears to have prevailed in the current quarter. Gross domestic product increased at a 3.1% annualized rate, also driven by strong defense spending, the government said in its third reading of first-quarter GDP.

U.S. auto sales are expected to drop 1.5% in June from a year earlier, as higher prices continue to keep buyers away. The consultancies estimate total U.S. vehicle sales of about 1.47 million units in June, with retail sales of new vehicles expected to drop 2.9% to 1.15 million units.

The Federal Reserve’s preferred measure of underlying U.S. inflation showed signs of picking up in May toward the central bank’s goal, potentially raising the bar for an interest-rate cut when policy makers meet at the end of next month. The core personal consumption expenditures price gauge, which excludes food and energy, rose 0.2% from the prior month and 1.6% from a year earlier.

Economic uncertainty and slackening demand have pushed inventories at European companies in March this year to their highest level since 2012.The Euler Hermes report, released on Thursday, found that European companies were stockpiling more than companies anywhere else in the world, highlighting the vulnerability of Europe's export-based economies to global trade tensions.

Inflation edged closer to the European Central Bank's target in German states in June, data showed on Thursday, but analysts said the figures are unlikely to prompt a reversal of its decision not to raise interest rates in the coming year. The ECB aims to keep inflation in the euro zone close to, but just below, 2% a year. Earlier this month, it opened the door to cutting rates or buying more bonds, as risk factors such as trade wars dragged down the euro zone economy.

British retail sales plunged this month at the fastest annual pace in 10 years, according to figures that reflect unusually strong sales a year ago but add to questions about the economy's momentum in the second quarter. The Confederation of British Industry's monthly retail sales balance fell to -42 from -27 in May.

U.S. companies' borrowing to spend on capital investments rose 18% in May from a year earlier.Companies signed up for $9.1 billion in new loans, leases and lines of credit last month, up from $7.7 billion a year earlier. Borrowings rose 3% from the previous month.

Britain's current account deficit with the rest of the world ballooned to its highest since late 2016 in the first three months of this year, though much of the increase was driven by hefty gold imports.Figures from the Office for National Statistics on Friday confirmed that economic output grew a solid 0.5% in the first quarter of the year.

Underlying inflation in the euro zone rebounded in June, offering some comfort to the European Central Bank but still falling short of the improvement policymakers are hoping for. Overall inflation held steady as expected at 1.2 percent, well short of the ECB's target of almost 2 percent, but a closely watched 'core' figure, excluding volatile food and energy prices, jumped to 1.2 percent from 1 percent in May.

Local Market

The benchmark BSE Sensex and the broader NSE index fell 0.48% and 0.45%, respectively, tracking Asian shares and as investors await developments on U.S. and China trade talks later this week. Losses were led by financial stocks such as HDFC Bank, ICICI Bank and index heavyweight Reliance Industries. The indices also posted their first monthly fall in four months.

India's current account deficit narrowed to just 0.7 percent of gross domestic product in the fourth quarter of the fiscal year ended March 31, from 1.8 percent in the year-earlier period as the nation's merchandise trade deficit contracted and its services surplus rose. The Reserve Bank of India said on Friday that the current account deficit was $4.6 billion, against $13.0 billion in the quarter ended March 31, 2018.