Sep 15 2018

Rupee plunges to all time lows; RBI step in, finally

Weekly Synopsis

 

15th September 2018

Markets from 10th September to 14th September 2018:-

 

Indian Rupee:-

  • The Indian rupee ended higher at 71.8450 to a dollar, highest since Sep. 7, against 72.19 at close on Sep. 12. The currency hit a record-low 72.92 on Sep. 12. For the week, it was down 0.2% and 12.5% for the year, making it the worst performing Asian currency. The rupee closes on Friday at 71.8450 against the previous weekly close of 71.73 on Sep 7th, 2018 to a greenback. It trades in a weekly range between 72.91 to 71.51 against the greenback.
  • Investors await Prime Minister Narendra Modi’s likely economic review meeting over the weekend and possibility of measures to stem the ongoing depreciation in the rupee.

 

Global Market:-

  • The dollar index rose 0.41 percent. The greenback has been a safe haven from setbacks on the trade issue.
  • U.S. President Donald Trump has directed aides to place U.S. tariffs on about $200 billion of Chinese goods, according to a person familiar with the matter.
  • A world stock index climbed as bank and energy shares rose on Friday, but the momentum was sapped by a report that Washington may fire a new salvo in its trade dispute with Beijing.
  • A sharp interest rate increase by Turkey’s central bank to support a tumbling lira boosted emerging markets. The bank hiked its benchmark interest rate by more than one-third, to 24 percent.
  • The euro climbed to a two-week high earlier on Friday before retreating against the greenback. The common currency was down 0.5 percent at $1.16325.
  • U.S. domestic retail sales rose 0.1 percent in August, the smallest gain in six months, but July figures were revised higher, supporting the view of solid consumer spending in the third quarter.
  • The Bank of England left interest rates unchanged on Thursday, in what was a widely anticipated decision, and indicated that any more hikes will be at a gradual pace as it monitors developments with ongoing Brexit negotiations between the UK and the European Union.
  • The nation’s retail inflation rate rose 3.69% last month, slowest pace in 10 months and below the 3.86% forecast. The August print was slower than July’s 4.17% reading and below the nation’s rate-setting Monetary Policy Committee’s inflation target.
  • Wholesale inflation rate rose 4.53% on year in August, the slowest pace of annual expansion in four months and easing from an annual 5.09% increase in July.
  • U.S. import and export prices unexpectedly fell in August, official data showed on Friday. In a report, the U.S. Bureau of Labor Statistics said they showed a decline of 0.6%.
  • U.S. industrial production rose in September, according to data released on Friday. The Federal Reserve reported that industrial output advanced 0.4% last month after gaining the same amount in July.
  • Production at factories in the euro zone dropped in July for a second consecutive month and by more than expected, in what could herald a possible slowdown of the bloc’s economy in the third quarter, official data released on Wednesday showed.
  • Chicago Fed President Charles Evans on Friday cautioned the central bank’s rate hikes would take a toll on U.S. growth by 2019. index that tracks the dollar against six major currencies was up 0.4 percent at 94.926 on Friday, trimming its weekly decline to 0.4 percent.
  • The Dow Jones Industrial Average fell 74.57 points, or 0.29 percent, to 26,071.42, the S&P 500 lost 7.54 points, or 0.26 percent, to 2,896.64 and the Nasdaq Composite dropped 29.94 points, or 0.37 percent, to 7,983.77.
  • European markets finished higher on Friday with shares in Germany leading the region. The DAX is up 0.57% while France’s CAC 40 is up 0.46% and London’s FTSE 100 is up 0.31%.

 

Local Market:-

  • Indian shares rose on Friday as the rupee strengthened after crude prices fell sharply overnight and the United States and China looked set to launch a new round of trade talks amid an escalating tariff row.
  • The broader NSE index was up 0.82 percent at 11,463.25 while the benchmark BSE index was 0.62 percent higher at 37,951.50.
  • Financials accounted for nearly half the gains, with Housing Development Finance Corp Ltd closing 2.5 percent higher. At close, only four stocks were in the red on the NSE index while two ended lower on the BSE index.
  • India’s trade deficit narrowed to $17.4 billion in August from a five year high of $18.02 billion hit in July, the trade ministry said on Friday, helped by a pick up in exports after a fall in the rupee.