Rupee falls for 2nd week on fiscal worries

Rupee falls for 2nd week on fiscal worries

19 Jan 2019 03:19 PM

Weekly Synopsis

Date:- 19th January 2019

 Markets from 14th January 2019 to 18th January 2019:-

 Indian Rupee

Indian rupee fell for a second week, as concerns that likely pre-election spending may lead the nation to deviate from its fiscal consolidation path triggered outflows from local bonds. However, optimism about U.S.-China trade talks limited losses in the local unit.

For the week, the domestic currency slipped 0.9%, after falling 1% last week. The rupee closes on Friday at 71.18 against the previous weekly close of 70.4850 on January 11th, 2019 to a greenback. It trades in a weekly range between 70.4450 to 71.40 against the US Dollar.

India's foreign exchange reserves rose to $397.35 billion as of Jan 11, compared with $396.08 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.

India's trade deficit narrowed to $13.08 billion in December, the lowest in 10 months, due to a fall in gold imports, the trade ministry said in a statement on Tuesday. In November, the trade deficit was $16.67 billion.

India's retail inflation rate dropped to 2.19 percent in December from a year earlier, the lowest level since June 2017, government data showed on Monday. Analysts poll had forecast December's annual increase in the consumer price index at 2.20 percent, compared with November's 2.33 percent.

India's annual wholesale price inflation eased to an eight month low of 3.80 percent in December, government data showed on Monday. Annual wholesale price inflation last month was lower than a provisional 4.64 percent rise in November, and below a 4.42 percent increase forecast by economists in a poll.

Global Market

The dollar snapped a four-week losing streak against its rivals Friday, on the back of a decline in the Japanese yen. The gains come amid growing investor optimism over a U.S-China trade deal after Chinese officials reportedly offered to boost U.S. imports. The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, was last seen at 96.31.

U.S. consumer optimism waned in January, hitting its lowest level since President Donald Trump was elected. The preliminary publication of the data for January from the University of Michigan's Consumer Survey Center showed that consumer sentiment decreased to 90.7 from 98.3 a month earlier. Economists had forecast a drop to 97.

UK retail sales fell short of expectations in December, adding to evidence that uncertainty over the country's departure from the European Union is hurting consumer sentiment. Retail sales fell 0.9% in December, and were up only 3.0% from a year earlier, the Office for National Statistics said on Friday. Economists had forecast a 0.8% decline for the month.

The number of people who filed for unemployment assistance in the U.S. fell unexpectedly last week, hitting their lowest level in five weeks. The U.S. Department of Labor said that the number of individuals applying for initial jobless benefits in the seven days ended Jan. 12 decreased by 3,000 to a seasonally adjusted 213,000.

The Philadelphia Fed's manufacturing index rose in January, to a reading of 17.0 from 9.1 in December, the Philly Fed reported on Thursday. The consensus forecast had been for a reading of 9.7. Any reading above zero indicates improving conditions, below indicates worsening conditions.

The United Kingdom is likely to delay Brexit and another referendum is possible so opponents of European Union membership need to organise, prominent Brexit campaigner Nigel Farage said on Friday.

Euro zone consumer prices were flat in December, while the annual rate of inflation fell to 1.6% from 1.9% in November, according to a revised estimate released on Thursday. The monthly reading was revised up from an initial estimate of a 0.2% drop in prices, while the annual reading was unchanged, the bloc’s statistics agency Eurostat said.

The annual rate of change in Britain's consumer price index dropped to 2.1% last month, its lowest level since Jan. 2017, underlining the case for the Bank of England to hold off on further policy tightening amid the political crisis surrounding the UK’s departure from the European Union. That was compared to 2.3% the month before and in line with expectations.

Producer price inflation in the U.S. fell for the first time in four months in December, while core prices declined unexpectedly, official data showed on Tuesday. The data underlined expectations that the Federal Reserve can be patient on future rate hikes given that inflation remains stable. Producer prices declined by a seasonally-adjusted 0.2% last month, according to the Bureau of Labor Statistics, worse than forecasts for a drop of 0.1%.

The euro zone's trade surplus with the rest of the world declined in November from a year earlier, data released on Tuesday showed, due to a sharp rise of imports. European Union statistics office Eurostat said on Tuesday that the trade surplus of the 19-nation euro zone was 19.0 billion euros ($21.7 billion) on a non-seasonally adjusted basis, down from 23.4 billion euros in November 2017.

China’s exports shrank the most in two years in December, data on Monday showed. Exports in December unexpectedly fell 4.4% from a year earlier, while imports also fell 7.6%, the biggest drop since July 2016. Meanwhile, Chinese exports to the U.S. slid 3.5% in December while its imports from the U.S. were down 35.8% for the month.

U.S. stocks rallied on Friday, helping Wall Street's major indexes advance for the fourth consecutive week, on increased optimism about U.S.-China trade talks. The Dow Jones Industrial Average rose 336.25 points, or 1.38 percent, to 24,706.35, the S&P 500 gained 34.75 points, or 1.32 percent, to 2,670.71 and the Nasdaq Composite added 72.77 points, or 1.03 percent, to 7,157.23.

Over the week, the Dow rose 2.96 percent, the S&P 500 gained 2.87 percent, and the Nasdaq added 2.66 percent. All three indexes registered their biggest four-week percentage gain since October 2011.

Oil prices jumped about 3 percent on Friday, rising after OPEC detailed specifics on its production-cut activity to ease global oversupply. Brent crude was up $1.52 to settle at $62.70 a barrel, or 2.48 percent. U.S. West Texas Intermediate (WTI) crude futures added $1.73 to settle at $53.80 a barrel, or 3.32 percent.

 Local Market

Indian shares finished a touch higher on Friday, as earnings-driven gains in oil-to-retail conglomerate Reliance Industries Ltd helped offset sharp losses in Sun Pharmaceutical Industries Ltd.

The benchmark BSE index closed 0.03 percent higher at 36,386.61, while the broader NSE index ended up 0.02 percent at 10,906.95. The former posted a weekly gain of 1.05 percent - its best since late November - while the latter closed the week 1.02 percent higher.


Date : Jan-2019