Rupee posted its 2nd consecutive weekly fall

Rupee posted its 2nd consecutive weekly fall

06 Apr 2019 03:18 PM

Weekly Synopsis

Date:- 06th April 2019


Indian Rupee

Indian rupee fell for a second consecutive week against the dollar, as foreign investors’ greenback inflows into local assets slowed in the first week of the new financial year. The local unit fell 0.1% this week, adding to last week’s 0.3% decline. The rupee closes on Friday at 69.22 against the previous weekly close of 69.15 on March 29th, 2019 to a greenback. It trades in a weekly range between 68.38 to 69.37 against the US Dollar.

India's foreign exchange reserves rose for a seventh consecutive week to $411.91 billion as of the week ended Mar. 29, the highest level since week ended Jun. 8, 2018, and against $406.67 billion at the end of the previous week, according to central bank data released yesterday. The rise was mainly due to an increase in foreign currency assets to about $384.05 billion from $378.81 billion in the prior week, the data showed.

India's central bank cut its benchmark interest rate by 25 basis points on Thursday, in a widely expected move to boost the economy, while keeping its monetary policy stance "neutral" despite subdued inflation. The six-member monetary policy committee (MPC) cut the repo rate to 6.00 percent as predicted by 57 of 67 analysts polled last week. The reverse repo rate was reduced to 5.75 percent.

Global Market

The U.S. dollar posted a second-straight weekly win despite rising investor expectations that the Federal Reserve will keep monetary policy tightening on hold following a mixed U.S. jobs report. The U.S. dollar index, rose by 0.18% to 97.36 compared with previous week close at 97.18.

The Nonfarm payrolls rose by just 182,000 compared to expectations for a 175,000 gain, according to estimates from The unemployment rate remained unchanged to 3.8%, but average hourly earnings, an important number to gauge inflation, slowed to 0.1% from 0.4% year over year in March.

The number of people who filed new applications for unemployment assistance in the U.S. last week unexpectedly fell to their lowest in nearly 50 years. The U.S. Department of Labour said Thursday that initial jobless claims in the week ended March 30 fell unexpectedly by 10,000 to a seasonally-adjusted 202,000. That was the lowest level since December 1969.

German industrial orders fell at their sharpest rate in more than two years in February as they were hit by a slump in foreign demand. Contracts for German goods slumped by 4.2 percent, data from the Economy Ministry showed on Thursday. That compared to a fall of 2.1 percent in January, revised from a drop of 2.6 percent.

Activity in the U.S. economy’s service sector slowed in March but stayed clearly in expansion territory, according to a closely-watched survey released on Wednesday. The Institute of Supply Management said its non-manufacturing purchasing managers’ index (PMI) fell to 56.1, its lowest since August 2018, due partly to concerns about labour market constraints.

The U.S. economy added the fewest private sector jobs since October 2017 last month. U.S. private employers added just 129,000 jobs in March, down from 197,000 in February, according to a report by payrolls processor ADP released on Wednesday. Economists had expected a gain of 184,000 jobs.

Euro zone retail sales, an indication of domestic demand, were stronger than expected in February. The European Union's statistics office Eurostat said retail sales in the 19 countries sharing the euro rose 0.4 percent month-on-month for a 2.8 percent year-on-year gain. Economists polled had expected a 0.2 percent monthly increase and a 2.3 percent annual rise.

Business activity across the euro zone was lethargic last month. IHS Markit's Euro Zone Composite Final Purchasing Managers' Index (PMI), considered a good measure of overall economic health, dipped to 51.6 in March from February's 51.9. That was higher than an earlier flash reading of 51.3 but closer to the 50 mark separating growth from contraction.

Employment, prices and backlogs all grew in Germany's services sector in March, a survey showed. Index provider Markit's services Purchasing Managers' Index (PMI) inched up to 55.4 in March, its highest since September, from 55.3 in February.

Orders for durable goods fell in February, breaking a three-month stretch of gains and increasing worries that the economic slowdown at the turn of the year may drag on well into 2019. Durable-goods orders fell 1.6% last month, the Commerce Department said, more than the 1.1% decline expected by economists.

Activity in the U.K. construction sector contracted for a second month running in March. Research firm IHS Markit said its construction purchasing managers’ index rose to 49.7 in March, a marginal improvement from February’s 11-month low but still a second consecutive contraction.

U.S. retail sales unexpectedly fell in February. Retail sales dropped 0.2 percent. Data for January was revised higher to show retail sales increasing 0.7 percent instead of gaining 0.2 percent as previously reported. Economists polled had forecast retail sales rising 0.3 percent in February. Retail sales in February advanced 2.2 percent from a year ago.

The rate of growth in the economy's manufacturing sector picked up in March, rebounding from a two-year low hit a month earlier. The Institute of Supply Management said its manufacturing purchasing managers' index rose to 55.3 in March from 54.2 the previous month. February’s reading had been its lowest level since November 2016. Economists had forecast a reading of 54.5.

U.S. stocks were higher on Friday, as gains in the Oil & Gas, Utilities and Healthcare sectors led shares higher. At the close in NYSE, the Dow Jones Industrial Average gained 0.15% to hit a new 3-months high, while the S&P 500 index added 0.46%, and the NASDAQ Composite index gained 0.59%.

Brent crude futures settled at $70.34 a barrel, up 94 cents, or 1.35 percent. The session high of $70.46 was the strongest since Nov. 12.  U.S. West Texas Intermediate (WTI) crude settled at $63.08 a barrel, up 98 cents, or 1.58 percent. Earlier in the session, WTI hit $63.24, the highest since Nov. 6. Brent recorded its second straight week of gains, while WTI saw its fifth consecutive weekly rise.

Local Market

Indian shares snapped two sessions of losses to end higher on Friday, closing firmer for a seventh consecutive week, as positive global cues added to investor risk appetite a day after the Reserve Bank of India (RBI) slashed a key lending rate.

The benchmark BSE index closed up 0.46 percent at 38,862.23, gaining 0.5 percent in the first week of the 2019-20 financial year. The broader NSE index ended 0.59 percent higher at 11,665.95, adding 0.36 percent for the week. Both indexes ended in the green for nine weeks in 10.