Aug 24 2018

Rupee posted its biggest weekly gain in 6 weeks

Weekly Synopsis

24th August, 2018

Markets from 20th August to 24th August 2018:-

Rupee:-

  • The Indian rupee posted its biggest weekly rise in six weeks against the dollar, as foreign fund inflows erased losses triggered after the Federal Reserve’s latest meeting minutes hinted at an interest rate hike next month, boosting demand for the U.S. currency. On a weekly basis, the local currency rose 0.35%, its biggest weekly rise since the week ended on Jul. 13. The rupee closes on Friday at 69.91 against the previous weekly close of 70.15 on Aug 17th, 2018 to a greenback. It trades in a weekly range between 70.23 to 69.5250 against the greenback.
  • India’s foreign exchange reserves fell for a fourth week to $400.85 billion as of the week ended Aug. 17, from $400.88 billion in the previous week, the central bank said today. The decrease was due to a fall in foreign currency assets to $376.21 billion from $376.27 billion in the previous week, according to central bank data. The RBI has been intervening in the foreign exchange market to curb the rupee’s volatility. It has sold a net $4.41 billion from the spot foreign exchange market in January-June, compared with a net purchase of $13.18 billion in the same period of 2017.

Indian Equities:-

  • Indian shares closed lower on Friday after four straight sessions of gains, as investors took a breather following a record-setting spree.
  • Financial and consumer stocks were among the top losers with ICICI Bank shedding 2.1 percent and Yes Bank down 3.7 percent.
  • The benchmark BSE index fell 0.22 percent to 38,251.80, but ended the week 0.8 percent higher. The broader NSE index declined 0.22 percent to 11,557.10, but posted a weekly gain of 0.75 percent. Both indexes posted their fifth consecutive weekly gain.

Global Markets:-

  • The dollar fell on Friday ahead of a speech by the Federal Reserve’s chairman which investors hope will provide an indication of the central bank’s plans for monetary tightening and reaction to recent criticism by U.S. President Donald Trump.
  • The greenback has been buoyed by a new round of tariffs in the escalating U.S.-China trade conflict and the Fed’s latest policy meeting minutes which signalled a September interest rate rise. But the currency slipped on Friday and was headed for its biggest weekly decline since March. The dollar index, which measures the greenback’s performance against six major currencies, was down 0.3 percent, trading at 95.360.
  • Powell is due to give a speech later in the day at the Jackson Hole, Wyoming, conference of central bankers. Where he stands on the pace of interest rate hikes will be scrutinised after minutes from the Fed’s most recent policy meeting indicated the central bank would tighten monetary policy soon. Powell is due to speak at 07.30PM.
  • Reports that trade negotiations between the U.S. and China ended yesterday without much progress weighed on the risk appetite. The talks were held in the wake of heightening trade tensions between the two countries amid implementation of second round of tit-for-tat tariffs on each other’s imports yesterday.
  • Most Asian currencies ended higher. China’s offshore yuan rose 0.9%.
  • Sales of new U.S. single-family homes unexpectedly fell in July to a nine-month low in a sign the housing market was cooling and could give less support to the overall economy. The Commerce Department said on Thursday new home sales decreased 1.7 percent to a seasonally adjusted annual rate of 627,000 units last month, the lowest level since October 2017. June’s sales pace was revised up to 638,000 units from the previously reported 631,000 units.
  • The number of people who filed for unemployment assistance in the U.S. last week fell more than expected, remaining in territory consistent with a strengthening labor market, official data showed on Thursday. The number of individuals filing for initial jobless benefits in the week ended August 18 decreased by 2,000 to a seasonally adjusted 210,000 from the previous week’s total of 212,000, the U.S. Department of Labour said.
  • Protectionism and the threat of a global trade war are the biggest risks to the euro zone economy but growth for now remains firmly on the path seen earlier, European Central Bank policymakers concluded last month. In a meeting with few if any disagreements, rate setters shared the view that the bloc was performing as expected so no tweak to policy was needed, the minutes of the July 26 meeting showed on Thursday.
  • European markets are higher today with shares in France leading the region. The CAC 40 is up 0.40% while Germany’s DAX is up 0.21% and London’s FTSE 100 is up 0.17%.