Rupee recorded its first weekly decline in 4 weeks

Rupee recorded its first weekly decline in 4 weeks

12 Jul 2019 06:48 PM

Weekly Synopsis


Indian Rupee

Indian Rupee recorded its first weekly decline in four against the dollar, as losses in local shares continued post budget announcement and upbeat U.S. data caused uncertainty over the quantum of interest rate cut in the world’s biggest economy. The unit fell 0.4% this week. The pair USDINR closes at 68.68 against the previous weekly close of 68.42 on July 05th, 2019 to a greenback. It trades in a weekly range between 68.29 to 68.8450 against the greenback.

India's industrial output rose 3.1% in May from a year earlier, slowing from the previous month’s revised print, mainly dragged by the key manufacturing and mining output that grew at a slower pace, government data showed today. The reading significantly lagged April’s revised expansion of 4.3%, and trailed the 3.2% annual expansion estimated in a poll of economists.

India's retail inflation rate hit an eight-month high in June on higher food prices, the government said on Friday, but stayed below the central bank's medium-term target of 4% for an eleventh straight month. Annual retail inflation in June was 3.18%, up from 3.05% in the previous month, but below analyst forecasts. A poll had predicted a retail inflation rate of 3.20% for June.

India's foreign exchange reserves rose to $429.91 billion, as of July 5, compared with $427.68 billion a week earlier, the Reserve Bank of India said on Friday. Changes in foreign currency assets, expressed in dollar terms, include the effect of appreciation or depreciation of other currencies held in its reserves.

Global Market

The dollar fell for a third consecutive day on Friday as stronger-than-expected U.S. inflation data failed to shake convictions that the Federal Reserve will start cutting interest rates at a policy meeting later this month. Against a basket of other currencies, the dollar fell 0.1% to 96.94 and was on track for its biggest weekly drop in three weeks.

U.S. underlying consumer prices increased by the most in nearly 1-1/2 years in June. The Labour Department said on Thursday its consumer price index excluding the volatile food and energy components rose 0.3% last month. That as the largest increase since January 2018 and followed four straight monthly gains of 0.1%.

The euro trimmed earlier gains after European Central Bank Governing Council member Ignazio Visco said on Friday the ECB will need to adopt further expansionary measures if the euro zone economy does not pick up and will consider its options "in the coming weeks". The single currency was flat at $1.1258, below an intraday high of $1.1275 in early London trading.

Euro zone industrial production rose more than expected in May, data released on Friday showed. The EU statistics agency Eurostat said euro zone factory output increased by 0.9% in May on the month, above market consensus expectations of a 0.2% rise. The most pessimistic expected drops up to 0.5%.

China's trade surplus with the United States, a major source of friction with its biggest trading partner, rose to $29.92 billion (£23.86 billion) in June from $26.9 billion in May, customs data showed on Friday. For the first half of 2019, China's trade surplus with the U.S. was $140.48 billion, compared with $133.76 billion in the same period in 2018.

Unemployment across the eurozone has hit a fresh 11 year low in May 2019. According to the latest Eurostat data, the unemployment rate in all the 28 EU members stood at 6.3% vs 6.4% in April. In the eurozone the rate is at the record low of 7.5% vs 7.6% in April.

Britain's housing market showed tentative signs of recovery in June as interest among buyers rose for the first time since shortly after the 2016 Brexit referendum and sales also staged a rare increase, a survey showed on Thursday. The Royal Institution of Chartered Surveyors (RICS) house price measure - the difference between members reporting price rises and falls - improved to -1, the strongest reading since August last year.

German annual inflation accelerated to 1.5% in June, remaining below the European Central Bank's target, final data from the Federal Statistics Office showed on Thursday. The reading for German consumer prices - harmonised to make it comparable with inflation data from other European Union countries - was revised up after preliminary data released at the end of June had shown prices increased by 1.3% year-on-year. The ECB targets inflation of close to but below 2% for the euro zone as a whole.

Investor morale in the euro zone deteriorated yet further in July. The Sentix research group said its investor sentiment index for the euro zone fell to -5.8 in July, down from -3.3 the month before, and well short of the 0.1 analysts had forecast. That was the lowest reading since November 2014. A sub-index for Germany plunged to -4.8 from last month's -0.7, its lowest in almost a decade.

German exports rebounded more strongly than expected in May but failed to fully recover from a slump a month earlier, data showed on Monday. Exports grew by 1.1% on the month in May, data from the Federal Statistics Office showed on Monday, surpassing the 0.5% rise forecast in a poll. In April, shipments abroad fell by 3.4%. Imports fell 0.5% on the month in May. The upshot was a rise in the trade balance to 18.7 billion euros (£16.77 billion) from 16.9 billion in the prior month.

China’s foreign-currency holdings rose for a second month amid potential capital inflows and positive valuation effects to the highest level in more than a year. Reserves climbed to $3.119 trillion in June from $3.101 trillion in the previous month, the People’s Bank of China said Monday.

Oil prices inched higher on Friday and were on track for a weekly gain as U.S. oil producers in the Gulf of Mexico cut more than half their output because of a tropical storm and as tensions continued to simmer in the Middle East. However, an International Energy Agency (IEA) forecast for a global oil surplus capped the gains. The agency on Friday predicted that surging U.S. oil output will outpace sluggish global demand and lead to a large stocks build around the world in the next nine month.

Brent crude futures were up 24 cents at $66.76 a barrel after hitting a session high of $67.29. U.S. West Texas Intermediate (WTI) crude futures were up 6 cents at $60.26 after hitting a session high of $60.74. Brent prices have climbed 4.5% this week while WTI prices have gained 5.5%. Both registered declines last week.

Local Market

Indian shares closed lower after a volatile session on Friday, led by declines in IT firm Wipro Ltd and Oil and Natural Gas Corporation Ltd. The broader NSE index closed down 0.26% at 11,552.5, while the benchmark BSE index settled 0.22% lower at 38,736.23. Both indexes saw their worst week since May 10.

Wipro was the biggest percentage loser on the NSE index, falling 3.3% to its worst closing level since March 29, while energy giant ONGC slipped 2.2%. India's no.2 IT services firm Infosys Ltd closed up 0.7% ahead of its quarterly results.