Dec 06 2018

Rupee At 2-Week Low On Weak Before OPEC Meet

Financial Market Overview

06th December, 2018

Evening Coffee                                                                        

Indian Rupee:-

  • The Indian rupee ended at an over two-week low against the dollar, in line with regional currencies amid global risk aversion and caution ahead of Organization of Petroleum Exporting Countries’ decision on crude oil output cut. The rupee ended off lows as Brent crude oil price slipped below $60 per barrel, after Saudi Arabia energy minister said an output cut of one million barrel per day would be enough.
  • The rupee settled at 70.90 to a dollar, its lowest since Nov. 20, against 70.46 at close yesterday. It opened at 70.79 and extended fall to day’s low of 71.14 Brent crude oil prices traded 3% lower at $59.70 per barrel. The contract has slumped by nearly 30% in last two months on concerns of supply glut. India imports about 80% of its crude oil requirement.

 Indian Equities:-

  • Benchmark indices corrected sharply for the second consecutive session in line with global weakness on Thursday, ahead of a crucial OPEC meeting decision due later in the day. In intraday trade, the Sensex fell more than 600 points and the Nifty broke 10,600 levels.
  • GDP is not good, tax collection not good, liquidity problem continued in NBFCs, auto sales likely to be weak in December, so taking all these into consideration, there is a high possibility that the market may see 9,900 levels or March lows again in coming weeks.

 Global Markets:-

  • European markets are sharply lower today with shares in London off the most. The FTSE 100 is down 2.53% while Germany’s DAX is off 2.45% and France’s CAC 40 is lower by 2.38%.
  • The dollar and the yen rose on Thursday after the arrest in Canada of a top executive of Chinese tech giant Huawei prompted fears of a flare-up in U.S.-China trade tensions.
  • The dollar has been under pressure over concern about a possible U.S. recession. But the arrest of Huawei Technologies Co Ltd’s chief financial officer increased safe-haven demand for the currency as doubts emerged over a truce on trade struck days ago between Presidents Donald Trump and Xi Jinping.The dollar could remain under pressure until this month’s Fed meeting when the market will see the Fed’s stance on policy and the economy.
  • The British parliament’s vote on Prime Minister Theresa May’s Brexit deal will go ahead as planned on Dec. 11, the leader of the House of Commons, Andrea Leadsom, said on Thursday.
  • Turnover in U.S. Treasuries jumped more than a third from a year earlier to an average $80.6 billion per day in November as investor activity picked up on the back of a flattening yield curve. The U.S. bond yield curve or the spread between ten-year U.S. debt over two-year maturities, shrunk to a more than a decade low of 11.3 basis points earlier this week from nearly 27 basis points at end-October on expectations that the world’s biggest economy was in the final stages of an expansion phase.