Rupee logged its biggest weekly decline in 5 weeks

Rupee logged its biggest weekly decline in 5 weeks

15 Jun 2019 02:19 PM

Weekly Synopsis


Indian Rupee

Indian rupee logged its biggest weekly decline in five weeks, as the evolving situation around U.S.-China trade talks kept the greenback buoyed and dented investor appetite for risk assets. Rupee was down 0.5% for the week, its biggest weekly decline since week ended May 10. The pair USDINR closes at 69.80 against the previous weekly close of 69.47 on June 07th, 2019 to a greenback. It trades in a weekly range between 69.28 to 69.8450 against the greenback.

India's foreign exchange reserves rose to $423.55 billion as of week ended June 7, against $421.87 billion at the end of the previous week, according to central bank data released yesterday. This rise was mainly due to an increase in foreign currency assets to about $395.80 billion from $394.13 billion in the prior week, the data showed.

India's industrial output in April grew 3.4% from a year earlier, government data showed on Wednesday. Analysts poll had forecasted April industrial output growth at 0.8%. Industrial output for 2018/19 grew at 3.6%.

India's retail inflation rate hit a seven-month high in May due to higher food prices, government data showed on Wednesday. Annual retail inflation in May was 3.05%, up from the revised 2.99% in the previous month, and above forecasts by analysts.

Wholesale price-based inflation slipped to 22-month low at 2.45 per cent in May helped by falling prices of food articles, fuel and power items, according to an official data released on Friday. The Wholesale Price Index (WPI)-based inflation was at 3.07 per cent in April. It was 4.78 per cent in May 2018.

Global Market

The dollar index climbed to its highest in almost two weeks on Friday after encouraging retail sales data for May released ahead of a Federal Reserve policy meeting next week eased fears that the U.S. economy is slowing sharply. The dollar index against a basket of currencies was last seen at 97.55, up 0.67% on the day and the highest since June 3.

U.S. retail sales increased in May and sales for the prior month were revised higher. The Commerce Department said retail sales rose 0.5% last month, just below economists’ expectations of a 0.6% gain. Data for April was revised up to show retail sales gaining 0.3%, instead of dropping 0.2% as previously reported.

U.S. manufacturing output rose in May, the first monthly gain this year. The Federal Reserve said on Friday manufacturing production rose 0.2% last month, which was slightly higher than analysts in a poll had expected but only a partial recovery from the prior month's sharp decline.

The number of Americans filing applications for unemployment benefits unexpectedly rose last week. Initial claims for state unemployment benefits rose 3,000 to a seasonally adjusted 222,000 for the week ended June 8. Economists poll had forecasted claims decreasing to 216,000 in the latest week.

U.S. import prices fell by the most in five months in May amid a broad decline in the cost of goods. The Labor Department said on Thursday import prices dropped 0.3% last month, the biggest decline since last December. Data for April was revised down to show import prices rising 0.1% instead of climbing 0.2% as previously reported.

Underlying U.S. producer prices increased solidly for a second straight month in May. Producer prices excluding food, energy and trade services rose 0.4% last month, matching April's gain, the government said. The so-called core PPI increased 2.3% in the 12 months through May after rising 2.2% in April.

British construction firms report having almost a third less work in the pipeline than a year ago. The subdued mood echoes official construction data released on Monday, which showed a sharp slowdown in annual growth to 2.4% in April, while May's IHS Markit/CIPS construction purchasing managers' index (PMI) dropped to its lowest since March 2018.

U.S. job openings fell slightly in April. The Job Openings and Labor Turnover Survey, or JOLTS report from the Labor Department on Monday also showed an uptick in layoffs, though they remained at historically low levels. Job openings, a measure of labor demand, slipped to a seasonally adjusted 7.4 million from 7.5 million in March, the government said. The job openings rate was unchanged at 4.7%.

Britain's economy contracted sharply in April after the biggest decline in car production since records began. Britain's economy overall contracted by 0.4% in April after a 0.1% decline in March, the Office for National Statistics said on Monday, a bigger drop than any economist had forecast in a poll last week.

Japan's economy grew slightly faster than initially estimated in the first quarter, thanks to stronger capital spending. The economy grew an annualized 2.2% in January-March, stronger than economists' forecast for 2.1% annualized growth and the preliminary reading of the same rate of expansion, Cabinet Office data showed on Monday.

China reported on Monday that its overall trade surplus in May was much more than what analysts previously forecasted. The surplus was $41.65 billion in May, China’s General Administration of Customs said, more than double the expected $20.5 billion.

The Federal Reserve meeting is scheduled next week. According to CME FedWatch Tool, the odds of a quarter-percentage point rate cut at next week’s meeting stand at around 30% while odds for the July meet are around 60%. Some traders expect Fed officials will use the June FOMC meet to signal an easing bias.

U.S. stocks were lower after the close on Friday, as losses in the Oil & Gas, Technology and Basic Materials sectors led shares lower. At the close in NYSE, the Dow Jones Industrial Average lost 0.07%, while the S&P 500 index lost 0.16%, and the NASDAQ Composite index declined 0.52%.

Oil rose about 1% on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions, but prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand. Brent futures settled 70 cents, or 1.1%, higher at $62.01 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.4%, to close at $52.51.

Local Market

Indian shares fell on Friday, ending lower for the second straight week, as investors were wary about the country's plans to impose higher tariffs on some U.S. goods, amid higher food prices in the domestic market. New Delhi was planning to impose the tariffs on over 20 goods imported from the United States, including almonds, apples and walnuts.

The broader NSE index closed down 0.76% at 11,823.30, while the benchmark BSE index ended 0.73% lower at 39,452.07. For the week, NSE dropped 0.4% and BSE fell 0.41%. The Nifty FMCG index ended down 1.3%, dragged down by heavyweights Hindustan Unilever and Colgate-Palmolive (India) Ltd, which closed down about 1.22% and 1.62%, respectively.