Rupee Logs 2nd Weekly Fall On Dollar Strength And Inflows Aid

Rupee Logs 2nd Weekly Fall On Dollar Strength And Inflows Aid

08 Feb 2019 10:11 PM

Weekly Synopsis

Date:- 08th February 2019

 Markets from 04th February 2019 to 08th February 2019 

Indian Rupee

The Indian rupee fell for a second straight week against the dollar, on broad greenback strength amid weakness in the euro, even as lower oil prices and likely foreign fund inflows in local bonds following a surprise rate cut at home restricted further losses. The rupee settled at 71.30 to a dollar on friday,against 71.45 at previous close. It trades in a weekly range between 71.0250 to 71.8175 against the US Dollar.

India's RBI bank on Thursday unexpectedly lowered interest rates and shifted its stance to "neutral" from "calibrated tightening" to boost a slowing economy after a sharp fall in the inflation rate. The monetary policy committee (MPC) cut the repo rate by 25 basis points to 6.25 percent.

India’s government bonds rose earlier today amid likely foreign inflows of around 20 billion rupees to 25 billion rupees ($279.92 million to $349.90 million) across tenors. The MPC cut its inflation forecast to 3.2%-3.4% for the first half of the next fiscal year from 3.8%-4.2%, with risks broadly balanced. The central bank forecasts growth for the next fiscal year at 7.4%.

Foreign investors have net sold $1.20 billion worth local debt since January until yesterday. Overseas investors net bought $55.82 million of Indian shares in the previous session, data from National Securities Depository Ltd. showed. These investors have net bought $277.53 million worth local shares so far in 2019.

India's April-December fiscal deficit narrowed to 7.01 trillion rupees, or 112.4 percent of the budgeted target for the current fiscal year, government data showed on Monday. In April-November, the country's fiscal deficit was 7.17 trillion rupees, or about 115 percent of the budgeted target. tax receipts in the first nine months of the fiscal year that ends in March were 9.36 trillion rupees. The government has revised upward its fiscal deficit target to 3.4 percent of GDP in the current fiscal year from the previously estimated 3.3 percent.

Global Market

The dollar index was trading 0.1% higher, heading for its fifth consecutive session of gains supported by the decline in euro after the European Commission cut eurozone economic growth forecasts. The single currency was trading little changed after an overnight drop to two-week low.

The number of people who filed for unemployment assistance in the U.S. last week fell less than expected, according to official data released on Thursday. The number of individuals filing for initial jobless benefits in the week ended Feb. 2 decreased by 19,000 to a seasonally adjusted 234,000.

New orders for U.S.-made goods unexpectedly fell in November amid sharp declines in demand for machinery and electrical equipment, government data showed on Monday, suggesting a slowdown in manufacturing as 2018 ended. Factory goods orders fell 0.6 percent, after an unrevised 2.1 percent drop in October.

U.S. retail sales are expected to rise between 3.8 percent and 4.4 percent to more than $3.8 trillion in 2019, citing high consumer confidence, low unemployment and rising wages. Preliminary estimates show retail sales grew 4.6 percent in 2018 to $3.68 trillion, exceeding the retail industry group's forecast for growth of at least 4.5 percent.

U.S. mortgage applications fell for a third consecutive week even as some 30-year home borrowing costs declined to their lowest levels since April 2018 in line with lower bond yields.The Washington-based group's seasonally adjusted index on mortgage activity decreased 2.5 percent to 378.9 in the week ended Feb. 1.

The U.S. trade deficit fell for the first time in six months in November as cheaper oil and higher domestic petroleum production helped to curb the country's import bill, leading economists to boost their economic growth estimates for the fourth quarter. The decrease in imports followed five straight monthly increases, likely as businesses stocked up amid an escalating trade war between the United States and China.

The U.S. Commerce Department's Bureau of Economic on Wednesday it would publish its advance fourth-quarter gross domestic product report on Feb. 28. The release of the report was initially scheduled for Jan. 30, but was delayed because of the 35-day partial shutdown of the federal government that ended on Jan. 25. The report will include some of the data that would normally go into the second GDP estimate.

Germany's DIHK Chambers of Industry and Commerce on Thursday slashed its 2019 growth forecast for the German economy to 0.9 percent from 1.7 percent, pointing to growing headwinds from abroad for Europe's biggest economy. Companies' outlook is getting clouded. Business expectations have significantly deteriorated in all economic sectors.

Euro zone businesses expanded at their weakest rate since mid-2013 at the start of the year as demand fell for the first time in four years, with a manufacturing slowdown spreading to services. IHS Markit's Euro Zone Composite Final Purchasing Managers' Index (PMI), considered a good measure of overall economic health, dipped to 51.0 from December's 51.1, its lowest reading since July 2013.

Britain's economy risks stalling or contracting as Brexit nears and the global economy slows, with firms in the dominant services sector reporting job cuts for the first time in six years and falling orders,Britain's economy defied forecasts from some economists that it would go into recession after the 2016 referendum vote to leave the European Union. But growth slowed sharply in late 2018 as worries mounted about an abrupt, no-deal Brexit.

Activity in the U.K. service sector slowed last month, bringing the economy near to stagnation, as heightened uncertainty over Britain’s impending departure from the European Union made companies more risk-averse. services purchasing managers’ index fell to 50.1 in January, below forecasts for a reading of 51.1, and below December’s reading of 51.2.

Activity in the U.K. construction sector slowed to a 10-month low in January, as uncertainty over the U.K.'s pending departure from the European Union made builders cautious over new projects. Construction purchasing managers’ index fell to 50.6 in January, compared to forecasts for a reading of 52.6.

Japanese services sector activity rose in January due to a pick-up in domestic demand, a business survey showed on Tuesday, but there are growing worries that economic activity will weaken due to the U.S.-Sino trade war. The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) rose to a seasonally adjusted 51.6 in January from 51.0 in December.

Oil prices rose, lifted by signs the United States and China could soon settle their protracted trade dispute, while producer cuts and U.S. sanctions on Venezuelan exports helped tighten supply. International Brent crude oil futures settled up $1.91 to $62.75 per barrel. U.S. West Texas Intermediate (WTI) futures rose $1.47 to settle at $55.26.

Local Market

Indian shares ended over 1 percent lower on Friday, hammered by auto stocks such as Tata Motors Ltd after the automaker stunned markets by posting the biggest-ever quarterly loss in Indian corporate history. The NSE index closed 1.14 percent lower at 10,943.60, while the benchmark BSE index was down 1.15 percent at 36,546.48. Biggest drag on both the indexes were Tata Motors' shares, ending 17.6 percent lower, their lowest closing level since Oct. 5, 2011. It posted a loss of about $3.8 billion for the three months ended.

Anil Ambani-led Reliance Group on Friday accused L&T and Edelweiss entities of "illegal" and "motivated" actions in invoking the pledged shares and selling them in open market causing a steep fall in its share value of approximately Rs 400 crore from February 4 to 7. The Reliance Capital, Reliance Infrastructure and Reliance Power, as well as their various subsidiaries, are performing satisfactorily on all operating parameters, and there is no change whatsoever on any aspect as compared to the position prevailing prior to these sales.

Indian Energy Exchange posted 18 per cent jump in its net profit to Rs 42.62 crore for the quarter ended December 31, mainly on the back of higher revenues. The company's net profit was Rs 36.20 crore in the same quarter a year ago.According to the statement, the company's total income rose to Rs 76.91 crore in third quarter compared to Rs 70.21 crore in the year-ago period.


Date : Feb-2019