Rupee logged its second weekly decline

Rupee logged its second weekly decline

11 Oct 2019 07:51 PM
 

Weekly Synopsis

 

Indian Rupee

Indian rupee logged its second weekly decline against the dollar, due to a sharp uptick in crude oil prices. The unit fell 0.2% this week, adding to last week's 0.5% decline. The pair USDINR closes at 71.02 against the previous weekly close of 70.88 on October 04th, 2019 to a greenback. It trades in a weekly range between 71.22 to 70.79 against the dollar.

India's foreign exchange reserves rose for a second straight week to a record high of $437.83 billion as of the week ended Oct. 4, from $433.59 billion at the end of the prior week, according to central bank data released today. The gain was mainly due to increase in foreign currency assets, that climbed to $405..61 billion from $401.62 billion in the previous week, the data showed.

India's industrial output fell 1.1% in August from a year earlier, government data showed on Friday. Analysts poll had forecast industrial output for the month to have grown at 1.8%. The cumulative growth in April-August over the corresponding period of the previous year was 2.4%.

Moody's Investors Service on Thursday cut its growth forecast for India for the fiscal year that began in April to 5.8% from 6.2% and said a weaker growth outlook will dampen the prospects for fiscal consolidation. The ratings agency had lowered India's growth forecast to 6.2% from 6.8% in August.

Global Market

The dollar index, which measures the greenback against a basket of developed market peers, fell to 98.312 overnight, its lowest in a week, as the Aussie, kiwi and loonie all made gains alongside sterling. On the Sino-U.S. trade front, officials expressed optimism the two sides could be able to ease the trade war. U.S. President Donald Trump said he will meet with Chinese Vice Premier Liu He later in the day and said the first day of trade talks went well.

Sterling surged on Friday to a three-month high as investors rushed to price in the prospect of a last-minute Brexit deal between the European Union and Britain. The pound has rallied more than 3% since Thursday, its biggest two-day gain since mid-June 2016, before the British public voted to leave the EU. The pound rose nearly 2% to a three-month high of $1.2685.

Consumer inflation in the U.S. undershot expectations in September, adding ammunition to those arguing for the Federal Reserve to cut interest rates at its policy meeting at the end of this month. The consumer price index was unchanged on the month and rose only 1.7% on the year, compared to expectations of a 0.1% increase and an annual rate of 1.8%.

The number of Americans filing applications for unemployment benefits unexpectedly fell last week. Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 210,000 for the week ended Oct. 5, the Labor Department said on Thursday. Data for the prior week was revised to show 1,000 more applications received than previously reported.

U.S. producer prices unexpectedly fell in September. In the 12 months through September the PPI increased 1.4%, the smallest gain since November 2016, after rising 1.8% in August. Economists poll had forecast the PPI nudging up 0.1% in September and advancing 1.8% on a year-on-year basis.

China's services sector grew at its slowest pace in seven months in September. The Caixin/Markit services purchasing managers' index (PMI) fell to 51.3 last month, the weakest since February, versus August's 52.1. It has stayed above the 50-point that separates growth from contraction on a monthly basis since late 2005.

British companies' demand for new staff increased in September at the weakest rate in almost eight years. An index of vacancies in a monthly labor market survey from the Recruitment and Employment Confederation (REC) fell to its lowest since January 2012 at 52.6, down from 52.8 in August.

European Central Bank’s latest stimulus salvo is failing to spark animal spirits, with investor sentiment in the region falling to the lowest level in more than six years. The Sentix economic index for the euro area dropped to -16.8 in October, the weakest level since April 2013.

British house prices rose at the slowest pace in more than six years in September, mortgage lender Halifax said on Monday in a latest sign of how Brexit is weighing on the housing market. House prices rose 1.1% year-on-year after a 1.8% rise in August, Halifax said. On the month, house prices fell 0.4%, after a 0.2% rise in August.

An Iranian-owned oil tanker was struck, probably by missiles, in the Red Sea off Saudi Arabia's coast on Friday, Iranian media said, an incident that if confirmed will stoke tension in a region rattled by attacks on tankers and oil sites since May. Oil prices climbed 2% after reports of the tanker incident, with benchmark Brent and U.S. West Texas Intermediate crude futures both rising more than $1 a barrel. Brent was trading around $60 a barrel on Friday.

Local Market

Indian shares closed higher on Friday as optimism over U.S.-China trade negotiations whetted investor appetite for riskier assets. The broader NSE index ended 0.63% higher at 11,305.05, while the benchmark BSE index closed up 0.65% at 38,127.08. Both indexes closed 1.2% firmer on-week. Metal and information-technology sectors led gains in both indexes. The metals index closed 2.35% firmer, while the IT index ended 1.5% higher.

Cipla Ltd and Infosys were top gainers in the Nifty 50 index, each closing 4% firmer. Yes Bank closed 3.3% lower, making it the top loser in the Nifty index after the lender's single-largest shareholder and co-promoter's family said they were willing to dilute stake if other investors come in.