Rupee logged the best week in 4 months

Rupee logged the best week in 4 months

13 Sep 2019 07:00 PM

Weekly Synopsis


Indian Rupee

Indian rupee logged its best week in more than four months against the dollar as risk appetite improved amid reduction in Sino-U.S. trade frictions and a stimulus announcement by the European Central Bank. The unit appreciated 1.1% this week, logging its best week since the week ended May 3. The pair USDINR closes at 70.9150 against the previous weekly close of 71.73 on September 06th, 2019 to a greenback. It trades in a weekly range between 71.87 to 70.8550 against the dollar.

India's retail inflation rate increased to a 10-month high in August but stayed below the central bank's 4% medium-term target. Annual retail inflation in August was 3.21%, up from 3.15% in July but below analysts' forecasts, data from the Ministry of Statistics showed on Thursday. A poll had forecast an annual retail inflation rate for August of 3.3%.

India's industrial output rose 4.3% in July from a year earlier, faster than the previous month’s revised print and the strongest showing since May, as manufacturing and mining output grew at a faster pace, government data showed yesterday. The reading surpassed June’s revised expansion of 1.2%, and exceeded median estimate in a poll of economists of 2.3% annual expansion.

Global Market

The dollar extended losses on Friday, as higher-yielding currencies advanced on hopes of at least a temporary truce to the U.S.-China trade war. The dollar index, which tracks the greenback against a basket of currencies, fell to its lowest in over a week in early trading and was at 98.07, down 0.2% from late Thursday.

U.S. underlying consumer prices increased solidly in August. The Labour Department said on Thursday its consumer price index excluding the volatile food and energy components gained 0.3% for a third straight month. In the 12 months through August, the core CPI increased 2.4%, the most since July 2018, after climbing 2.2% in July.

The number of Americans filing applications for unemployment benefits fell to a five-month low last week. Initial claims for state unemployment benefits declined 15,000 to a seasonally adjusted 204,000 for the week ended Sept. 7, the lowest level since April, the Labour Department said on Thursday. The drop in claims was the largest since May.

Euro zone production fell for a second consecutive month and by more than expected in July. Industrial production in the euro zone area fell by 0.4% in July from June and by 2.0% year-on-year. Economists had predicted less sharp drops in output of 0.1% month-on-month and 1.3% from a year earlier.

Business confidence among Japanese manufacturers has soured to hit the weakest level in 6-1/2 years. The Tankan sentiment index for manufacturers fell for a fourth straight month, reaching minus 7, the lowest point since March 2013.

U.S. producer prices unexpectedly rose in August and underlying producer prices rebounded. The Labor Department said its producer price index for final demand edged up 0.1% last month as a jump in the cost of services offset the largest drop in the price of goods in seven months. That followed a 0.2% gain in July.

China’s producer price index contracted again in August, data from the National Bureau of Statistics (NBS) showed on Tuesday. The producer price index (PPI) dropped 0.8% in August from a year earlier. Meanwhile, the consumer price index (CPI) rose 2.8% during the month year-on-year, unchanged in July.

Britain's economy picked up more than expected in July, data showed on Monday. Economic output in July alone was 0.3% higher than in June, the Office for National Statistics (ONS) said, marking the biggest rise since January and topping all forecasts in a poll of economists that had pointed to a 0.1% increase.

Investor morale in the euro zone improved slightly in September, a Sentix survey showed on Monday. The Sentix research group said its investor sentiment index for the euro zone edged up to -11.1 in September from -13.7 in August. That beat a poll of analysts who had predicted a decline to -14.0.

German exports rose in July, data showed on Monday. The Federal Statistics Office said seasonally adjusted exports rose 0.7% on the month while imports fell 1.5%. The trade surplus rose to 20.2 billion euros ($22.27 billion) after a downwardly revised 18.0 billion euros in the prior month. A poll of economists had pointed to a 0.5% drop in exports and a 0.3% fall in imports. The trade surplus was expected to come in at 17.5 billion euros.

European Central Bank on Thursday cut its deposit interest rate by 10 basis points to a record low of minus 0.5% and said it would restart bond purchases at a rate of 20 billion euros a month from Nov. 1 for an indefinite time.

Oil steadied above $60 a barrel on Friday as hints of progress in the U.S.-China trade dispute balanced concerns about slowing global economies and oil demand. Benchmark Brent crude was down 6 cents at $60.32 a barrel, while U.S. West Texas Intermediate rose 2 cents to $55.11.

Local Market

Indian shares closed higher on Friday, led by a rally in banks and auto stocks, and notched up gains for the week as investors cheered signs of progress in the trade dispute between the United States and China. The broader NSE index closed 0.85% up at 11,075.90, while the benchmark BSE index ended 0.76% higher at 37,384.99. For the week, the NSE and BSE indexes posted gains of 1.18% and 1.09%, respectively.

In the domestic market, the auto index was up 1.05% at close, while the banking index ended 1.01% higher. Oil marketing companies led gains on the blue-chip index, with Bharat Petroleum Corp closing up 6.34% and Indian Oil Corp ending 4.58% higher.