Rupee posted its worst weekly fall in 4 months

Rupee posted its worst weekly fall in 4 months

10 May 2019 06:28 PM

Weekly Synopsis

 Indian Rupee

Indian rupee recorded its worst weekly fall in four months against the dollar, as investors’ risk appetite took a hit after the U.S. levied fresh tariffs on Chinese imports even as the world’s biggest two economies try to reach agreement on trade issues.

The rupee fell 1% this week, posting its biggest weekly fall since week ended Jan. 11. The pair USDINR closes at 69.91 against the previous weekly close of 69.2150 on May 03rd, 2019 to a greenback. It trades in a weekly range between 70.08 to 69.29 against the greenback.

India's foreign exchange reserves jumped to a one-year high to $418.69 billion as of the week ended May. 3, against $418.52 billion at the end of the previous week, according to central bank data released today. The reserves increased to the highest since May 4, 2018. The rise was mainly due to an increase in foreign currency assets to about $390.87 billion from $390.42 billion in the prior week, the data showed.

India's industrial output in March contracted 0.1% from a year earlier, government data showed. Analysts poll had forecast March industrial output growth at 1.3%. Industrial output for 2018/19 grew at 3.6%, data showed.

Global Market

The dollar is broadly lower on Friday as markets ‘sell the fact’ of higher U.S. tariffs on China, after ‘buying the rumor’ all week. As of Friday, tariffs on $200 billion worth of Chinese imports into the U.S. will be raised to 25% from 10%, and President Donald Trump said he had ordered the preparation of new tariffs on a further $325 billion worth of goods.

U.S. consumer prices picked up in April, according to official government data released on Friday. The consumer price index rose 2.0% from a year ago, while core inflation, that excludes volatile food and energy costs, increased 2.1%. The headline number rose less than expected on both a monthly and annual basis.

The number of Americans filing applications for unemployment benefits fell less than expected last week. Initial claims for state unemployment benefits decreased 2,000 to a seasonally adjusted 228,000 for the week ended May 4, the Labor Department said on Thursday. Data for the prior week was unrevised.

U.S. producer prices rose moderately in April. The Labor Department said on Thursday its producer price index for final demand increased 0.2 percent last month after jumping 0.6 percent in March. In the 12 months through April, the PPI increased 2.2 percent, matching March's rise.

Consumer inflation in China hit a six-month high in April, mainly driven by rising pork prices, official data showed on Thursday. The official consumer price index rose 2.5% year-on-year in April, according to the National Bureau of Statistics, its highest reading since October. The number was in line with expectations and slightly higher than March’s 2.3%.

British companies' demand for staff rose at the slowest rate since 2012 last month, according to a survey on Thursday. The monthly index of staff demand from the Recruitment and Employment Confederation (REC) and accountants KPMG fell to 53.6 from 55.5 in March, its lowest level since August 2012.

British annual house price growth picked up by more than expected last month to hit its highest in over two years. House prices in the three months to April stood 5.0 percent higher than a year ago, the strongest growth since February 2017, following a 2.6 percent rise in the three months to March.

German industrial output rose unexpectedly in March. Industrial output increased by 0.5 percent on the month, defying a forecast for a 0.5 percent fall, data released by the Statistics Office showed on Wednesday. February's reading was revised down to an increase of 0.4 percent from a previously reported 0.7 percent rise.

China’s export missed expectations in April, data from China’s General Administration of Customs showed on Wednesday. The trade surplus for the month came in at $13.84 billion, far lower than the expected $35 billion. The figure was also lower than the $32.65 billion posted in March. Meanwhile, exports dropped by 2.7% in April from a year ago. Analysts expected an increase of 2.3% from a year earlier.

Activity in Japan's services sector expanded at a slightly slower pace in April than the previous month as growth in new business slowed, a business survey showed on Wednesday. The Markit/Nikkei Japan Services Purchasing Managers' Index (PMI) edged lower to a seasonally adjusted 51.8 in April from 52.0 in March.

U.S. job openings rebounded sharply in March. Job openings, a measure of labor demand, surged by 346,000 to a seasonally adjusted 7.5 million, the Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS, showed. The job openings rate rose to 4.7 percent from 4.5 percent in February.

The euro zone economy limped into the second quarter with lackluster growth as weakness in the manufacturing sector is increasingly affecting the bloc's dominant services industry, a survey showed on Monday. IHS Markit's Euro Zone Composite Final Purchasing Managers' Index (PMI), considered a good measure of overall economic health, dipped to 51.5 in April from March's 51.6.

Investor morale in the euro zone improved in May for the third month in a row to hit its highest level since November 2018. The Sentix research group said on Monday its investor sentiment index for the euro zone rose to 5.3 in May from -0.3 in April. Analysts had expected a reading of 1.4.

Oil prices rose on Friday. Brent crude oil was up 45 cents at $70.84 a barrel, having touched a peak of $71.23. U.S. West Texas Intermediate (WTI) crude futures were up 43 cents at $62.13, having earlier hit $62.49.

Local Market

Indian shares marked their eighth consecutive session of declines on Friday, the longest losing streak since mid-February, dented by Tata Steel that dropped on worries that its joint venture with Germany's Thyssenkrupp might derail.

The broader NSE index closed 0.2 percent lower at 11,278.90, while the benchmark BSE index ended 0.26 percent weaker at 37,462.99. The NSE index lost 3.7 percent this week, while the BSE index dropped 3.9 percent. Both the indexes posted their worst weekly decline since the week ended Oct. 5, 2018.