Nov 17 2018

Rupee gained 0.8% on a weekly basis, helped by crash in Crude oil prices

Weekly Synopsis

Week ending 17th November, 2018

Indian Rupee:-

The Indian rupee registered a weekly gain against the dollar and rose for a fourth session to a fresh two-month high, as slump in crude oil prices eased worries over widening current account deficit and boosted dollar inflows by foreign portfolio investors. The rupee settled at 71.92 to a dollar, its highest since Sep. 14, against 71.98 at previous close. It traded in 71.70-71.99 to dollar band on Friday, This week, the rupee rose 0.8%. Most Asian currencies also gained against the greenback on Friday.

Data yesterday showed India’s October trade deficit stood at $17.13 billion, widening for the first time in three months and against traders’ expectations of around $16 billion. The deficit was wider than the $14 billion in September and $14.6 billion a year earlier. Oil imports increased 52.6% on year to $14.2 billion in October and by 30% on month.

The Brent crude oil contract, heading for its sixth straight weekly decline, was last at $67.80 per barrel. Since climbing to multi-year highs in October, they have fallen by more than 25% until this week amid concerns over demand outlook and oversupply. India imports 80% of oil requirements and higher crude oil prices widen the nation’s trade deficit gap.

The dollar index was trading 0.1% higher, extending overnight gains. Yesterday’s advance in the index was helped by 1.5% slump in the pound after Brexit Minister Dominic Raab and other British ministers resigned in protest against the proposed draft Brexit agreement. The pound gained some lost ground today to trade 0.3% higher after Prime Minister Theresa May held to her Brexit plan.

Local Markets:-

Indian shares posted their best close in more than six weeks on Friday, powered by gains in the country’s biggest company by market value Reliance Industries Ltd. The broader NSE index closed 0.62 percent higher at 10,682.2, BSE index ended up 0.56 percent at 35,457.1 their highest closing levels since Oct. 3.Both the indexes finished the week 0.9 percent higher.

Gold rose to a one-week high on Friday as the dollar softened, while palladium held near a record high close to the price of bullion. The surge in palladium, used as an emissions-reducing auto catalyst for vehicles, reflected speculative buying driven by expectations of increased demand in a tight market. Spot gold was up 0.3 percent at $1,216.11 an ounce, having touched its highest since Nov. 9 at $1,218.33. U.S. gold futures gained 0.2 percent to $1,216.9.

Foreign investors net bought $265.17 million of Indian shares yesterday, data from National Securities Depository Ltd. showed. So far this month, overseas investors have net purchased $457.72 million worth Indian shares and $713.29 million worth of local debt after remaining net sellers in last two months.

Global Markets:-

The dollar fell on Friday after Richard Clarida, vice chairman of the Federal Reserve, said that interest rates were near neutral, but indicated that a December rate hike is still possible. The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, fell 0.46% to 96.35.

U.S. industrial production rose in October, according to data released on Friday. The Federal Reserve reported that industrial output rose 0.1% last month after gaining 0.2% in September. Economists had forecast industrial production rising 0.2%.

U.S. retail sales rose 0.8% in October the Commerce Department said on Thursday. This was compared to a 0.1% drop in the previous month which was revised down from an initial increase of 0.1%.Economists had forecast a reading of 0.6%.

The number of people who filed for unemployment assistance in the U.S. rose in line with expectations last week. The U.S. Department of Labor said that the number of individuals applying for initial jobless benefits in the seven days ended November 10 increased by 2,000 to a seasonally adjusted 216,000 from the previous week’s total of 214,000.

Euro zone inflation rose in October at its fastest pace in nearly six years, driven by energy prices, the European Union statistics agency said on Friday, confirming its earlier estimate. Eurostat said that consumer prices in the 19 countries sharing the euro rose 2.2 percent year-on-year in October after a 2.1 percent increase in September and a 2.0 percent gain in August. It was the biggest increase since December 2012.