Rupee gained 0.1% this week (15 Feb - 19 Feb)

Rupee gained 0.1% this week (15 Feb - 19 Feb)

20 Feb 2021 12:36 PM

Weekly Synopsis

Indian Rupee:-

The Indian rupee ended higher on Thursday and gained 0.13% this week against the dollar as a jump in long -term US Treasury yields offset the impact of robust foreign inflows in local equities. The Indian rupee closed at 72.65, the week compare to the previous week close of 72.75.

The country's foreign exchange reserves fell by $249 million to $583.697 billion in the week ended February 12, RBI data showed 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.

Global Market:-

The dollar lost ground on Friday as market participants favored currencies associated with risk-on sentiment over the safe-haven greenback. For the week, the dollar index slid about 0.2% against a basket of world currencies, the euro was essentially flat, and the yen lost more than 0.5%. But the British pound advanced more than 1.1% against the dollar, its best week since mid-December. Dollar Index closed this week at 90.316.

U.S. home sales unexpectedly rose in January despite tight inventories boosting house prices. The National Association of Realtors said on Friday that existing home sales increased 0.6% to a seasonally adjusted annual rate of 6.69 million units last month. Sales have been increasing even as contracts have been declining. Economists polled had forecast sales would fall 1.5% to a rate of 6.61 million units in January.

The hoped-for improvement in the U.S. labor market failed to materialize, last week, as another wave of layoffs put the country on course for another disappointing payrolls report in two weeks' time. Initial jobless claims rose to 861,000 last week, the Labor Department said, rather than falling to 765,000 as expected. To make it worse, the previous week's figures were revised upwards by over 50,000 to 848,000.

Output at U.S. factories increased more than expected in January even as a shortage of semiconductors weighed on the production of motor vehicles, pointing to resilience in the manufacturing sector recovery. Manufacturing production rose 1.0% last month after gaining 0.9% in December, the Federal Reserve said on Wednesday. That was the ninth straight monthly advance in factory production. Economists polled had forecast manufacturing output increasing 0.7% in January.

British retail sales tumbled in January as shops went back into lockdown, official data showed, but lower-than-expected public borrowing gave at least some relief to finance minister Rishi Sunak as he prepares his next round of emergency spending. The data for January showed retail sales volumes slumped by 8.2% from December, a far bigger fall than the 2.5% decrease forecast in a Reuters poll of economists and the second largest on record.

British house prices rose at the fastest rate in more than six years at the end of 2020, official figures showed on Wednesday, extending a surge driven by a temporary tax break and demand for more spacious housing since the start of the COVID-19 pandemic. The Office for National Statistics said house prices in December were 8.5% higher than a year earlier, compared with a 7.1% increase in November, the biggest year-on-year rise since October 2014.

Japan's exports accelerated in January, led by a jump in Chinese demand, and manufacturers' sentiment turned positive for the first time since 2019 signalling a gradual recovery from last year's deep coronavirus slump. Ministry of Finance data showed on Wednesday exports rose 6.4% in January from a year earlier, roughly in line with a 6.6% increase seen by economists in a poll and following a 2.0% gain in December.

Local Market:-

The country's equity markets scaled record peaks earlier this week on the back of strong corporate earnings, a well - received federal budget and strong foreign fund inflows. But they have retreated from those peaks as investors lock in gains in recent winners. Nifty 50 closed 0.91% lower at 14,981.75, while the S&P BSE Sensex ended down 0.85% at 50,889.76 on Friday. The Nifty -50 & BSE Sensex declined by 1.2% this week.

The Wholesale Price Index -based inflation stood at 2.03% in January 2021 compared with 1.22% in December, according to data released by the Ministry of Commerce and Industry on Monday. WPI inflation picked up even as primary articles contracted for the second straight month .