Sep 29 2018

Rupee marked its 5th consecutive weekly decline

Weekly Synopsis

Date:- 29th September 2018

Markets from 24th September 2018 to 28th September 2018:-

Indian Rupee:-

  • The rupee posted a fifth consecutive weekly decline and a third quarterly fall against the greenback. For the week, the rupee fell 0.39%. The rupee closed on Friday at 72.48 against the previous weekly close of 72.1950 on Sep 21st, 2018 to a greenback. It trades in a weekly range between 72.9650 to 72.33 against the greenback.
  • India’s foreign exchange reserves rose for a second consecutive week to $401.79 billion as of the week ended Sep. 21, against last week’s $400.49 billion, according to central bank data released yesterday. According to the data, forex reserves witnessed its largest weekly rise since week ended Mar. 30. The reserves had hit a record-high $426.08 billion in week ended Apr. 13.
  • On Wednesday, India raised basic customs duty on imports of 19 items and imposed duty on aviation turbine fuel, in an effort to control the widening current account deficit and support the rupee.
  • India reported on Tuesday a fiscal deficit of 5.9 trillion rupees ($81.4 billion) for April-August, or 94.7 percent of the budgeted target for the current fiscal year compared with 96.1 percent a year earlier.

Global Market:-

  • The dollar climbed to a two-week peak versus a currency basket on Friday, as concerns about the Italian budget weighed on the euro while the greenback drew support from an outlook for multiple U.S. interest rate hikes until 2020. For the third quarter, the dollar index, a gauge of its value against six major currencies, was on track to post its second consecutive quarterly gain, rising 0.5 percent. For the last six months, the greenback has advanced nearly 6 percent.
  • US. consumer spending rose 0.3 percent last month after an unrevised 0.4 percent gain in July, while a measure of underlying inflation remained at the Fed’s 2 percent target for a fourth straight month.
  • The Chicago Purchasing Management index for September was 60.4, slightly lower than the consensus forecast. The U.S. consumer sentiment index for September, on the other hand, was slightly lower than forecast at 100.1, but still the highest since March.
  • The Federal Reserve raised interest rates by a quarter point on Wednesday, while Fed Chairman Jerome Powell indicated there was no shift in thinking on monetary policy, despite an amendment to the statement. The Federal Open Market Committee increased the overnight funds rate to a range of 2.00% to 2.25%. Members of the rate-setting committee kept their 2018 median forecast for interest rates unchanged at 2.4%, suggesting a December rate hike remained in play, which would take the total rate hikes in 2018 to four. The outlook on rates for both 2019 and 2020 were also maintained at 3.1% and 3.4%, respectively.
  • The euro, meanwhile, slipped below $1.16 for the first time in two weeks after Italy’s government agreed on a budget seen by some investors as defying Brussels. The euro was last seen at 1.1612 down 0.2 percent.
  • In Italy, the government on Thursday targeted a budget deficit of 2.4 percent of gross domestic product for the next three years, marking a victory for party chiefs over Economy Minister Giovanni Tria, an unaffiliated technocrat. Although the deficit is within the prescribed EU limit of 3 percent of GDP, investors fear that Italy’s anti-establishment government is not committed to tackling its huge debt load. Italy’s debt-to-GDP ratio stands at about 130 percent, the second highest in the euro zone, behind Greece.
  • Emerging market currencies such as the Argentinean peso, South African rand and Turkish lira saw sell-off pressure on various political and economic factors. In a domino effect, Mexican peso, the South African rand and the Russian Ruble also saw bouts of weakness.
  • Soaring oil prices ahead of the upcoming U.S. sanctions on Iranian oil imports has raised fears of supply-side complications. On Wednesday, reports cited sources familiar with Organization of the Petroleum Exporting Countries policy saying Saudi Arabia and other producers discussed a possible output hike of about 500,000 barrels a day among the OPEC and non-OPEC allies.
  • Euro zone consumer prices rose in September, according to a flash estimate released on Friday. The bloc’s statistics agency Eurostat said its consumer price index rose 2.1% in September from the same month a year earlier.
  • European markets finished broadly lower on Friday with shares in Germany leading the region. The DAX is down 1.52% while France’s CAC 40 is off 0.85% and London’s FTSE 100 is lower by 0.47%.
  • US. equities were mixed at the close on Friday, as gains in the Utilities, Healthcare and Technology sectors propelled shares higher while losses in the Basic Materials, Financials and Oil & Gas sectors led shares lower. At the close in NYSE, the Dow Jones Industrial Average added 0.07%, while the S&P 500 index declined 0.00%, and the NASDAQ Composite index added 0.05%.

Local Market:-

  • Indian shares erased early gains and ended lower on Friday, wrapping up their worst month since February 2016, with auto stocks such as Maruti Suzuki (India) Ltd and Hero MotoCorp Ltd dragging the benchmark indexes lower.
  • Meanwhile, investors adopted a cautious stance ahead of the Reserve Bank of India’s policy meeting next week.
  • The benchmark BSE index closed 0.27 percent lower at 36,227.14 and was down 1.67 percent on week while the broader NSE index ended 0.43 percent lower at 10,930.45, shedding nearly 2 percent for the week.
  • The NSE index fell 6.42 percent in September while BSE index lost 6.26 percent, their worst monthly performance since February 2016, after concerns over bad debt in non-banking financial companies triggered a broad sell-off.
  • Hero MotoCorp ended 5 percent lower while Maruti Suzuki closed 2.7 percent down.