Dec 07 2018

Rupee snapped its 3-week wining streak

Weekly Synopsis

Date:- 07th December 2018

 

Markets from 03rd December 2018 to 07th December 2018:-

 

Indian Rupee

Indian rupee logged its biggest weekly fall in two months against the dollar, on a broad selloff in regional and local equities, prompted by increasing doubts over the likely success of U.S.-China trade negotiations and caution ahead of a meeting between oil producing cartel OPEC and its allies. Decline in Brent crude oil prices below $60 per barrel yesterday help the rupee trim some losses to end higher against the dollar today.

The rupee settled at 70.80 to a dollar against 70.90 at previous close. The currency opened at 70.56 and rose to day’s high of 70.44, before falling to an intraday low of 70.81. Most Asian currencies ended flat to higher against the greenback. The local unit snapped a three-week winning streak, dropping 1.7%, marking its biggest weekly decline since week ended on Oct. 5.

India’s foreign exchange reserves rose to $393.72 billion as of Nov 30, compared with $392.79 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.

India’s central bank kept interest rates unchanged at a policy meeting on Wednesday to offer support for an economy that has lost some momentum. The monetary policy committee (MPC) kept the repo rate unchanged at 6.50 percent on Wednesday as predicted by 64 of 70 analysts in a poll. All six members of the MPC voted to keep the rates on hold.

Global Market:-

The dollar nursed losses on Friday after sustaining a large overnight drop as growing speculation that the U.S. central bank may be readying to signal a pause in its three-year rate hiking campaign was offset by concerns that global growth is slowing. The greenback was broadly flat against its rivals at 96.83. However, on a weekly basis, the dollar was set for its biggest drop in more than two months against a basket of its rivals.

The euro zone economy grew at its slowest pace in four years in the third quarter of 2018. Euro zone gross domestic product (GDP) rose by 0.2 percent in the July-September period, Eurostat reported, confirming its earlier preliminary estimates.

German industrial output fell unexpectedly in October, data showed on Friday, adding to signs that a cooling trend in Europe’s largest economy will continue in the fourth quarter. Data from the Statistics Office showed industrial output fell by 0.5 percent, confounding a forecast for an increase of 0.3 percent.

New orders for U.S.-made goods recorded their biggest drop in more than a year in October. Factory goods orders fell 2.1 percent amid a decline in demand for a range of goods, the Commerce Department said on Thursday. That was the largest decrease in orders since July 2017.

The U.S. trade deficit jumped to a 10-year high in October as soybean exports continued to fall and imports of consumer goods rose to a record high. The Commerce Department said on Thursday the trade deficit increased 1.7 percent to $55.5 billion, the highest level since October 2008. The trade gap has now widened for a five straight months.

The number of people who filed for unemployment assistance in the U.S. last week fell less than expected, according to official data released on Thursday. The number of individuals filing for initial jobless benefits in the week ended Dec. 1 fell by 4,000 to a seasonally adjusted 231,000 the Labor Department said.

U.S. unit labor costs rebounded less than initially thought in the third quarter and the decline in the prior period was sharper than previously estimated, suggesting moderate growth in wage inflation. The Labor Department said on Thursday that unit labor costs, the price of labor per single unit of output, rose at a 0.9 percent annualized rate, instead of increasing at a 1.2 percent pace as reported last month.

Activity in the UK service sector unexpectedly slowed last month, falling to a 28-month low, while business confidence fell to the lowest levels since the Brexit referendum. The UK services purchasing managers’ index fell to 50.4 in November from 52.2 the previous month. It was the weakest reading since July 2016, just after the Brexit vote and was well short of forecasts of 52.2.

Euro zone business growth was at its weakest pace in over two years last month as a manufacturing-led slowdown showed further signs of spreading to the service industry, a survey showed on Wednesday. IHS Markit’s Euro Zone Composite Final Purchasing Managers’ Index (PMI), seen as a good guide to economic health, fell to 52.7 in November from October’s 53.1, its lowest since September 2016.

Euro zone manufacturing activity expanded at its weakest rate in over two years in November as new orders contracted for a second month. IHS Markit’s November final manufacturing Purchasing Managers’ Index fell for a third month, coming in at 51.8 from October’s 52.0, although above a flash reading of 51.5 and still exceeding the 50 level separating growth from contraction.

Crude prices were lower on Friday, as the Organization of the Petroleum Exporting Countries (OPEC) struggled to come up with an agreement on cutting oil production. West Texas Crude oil futures for January slumped 0.50% to $51.23 a barrel, after falling nearly 3% on Thursday. Meanwhile Brent crude futures, the benchmark for oil prices outside the U.S., dipped 0.45% to $59.78.

The Thursday session of the OPEC meeting in Vienna ended without any decision on cutting oil supply, as Iran seeks an exemption from any cuts due to U.S. sanctions which have already weighed on its exports. Saudi Arabia’s oil minister Khalid Al Falih said on Friday that he is not confident a deal will be reached. Oil is down 30% since October amid worry over increased supply as global demand slows.

Local Market

Indian shares ended higher on Friday, boosted by a surge in Kotak Mahindra Bank Ltd shares on a report that Warren Buffett’s Berkshire Hathaway Inc might take a stake in the private-sector lender.

The broader NSE index closed 0.87 percent higher at 10,693.70, while the benchmark BSE index ended up 1.02 percent at 35,673.25. For the week, the NSE index ended 1.7 percent lower, while the BSE index saw a fall of 1.4 percent. Kotak Mahindra shares closed 8.8 percent higher, after surging as much as 14 percent in their sharpest intraday gain in nearly nine years.