The Rupee depreciated 0.35% this week

The Rupee depreciated 0.35% this week

22 Feb 2020 12:53 PM
 

Weekly Synopsis

 

Indian Rupee

The Indian rupee fell against the dollar this week tracking a decline in most Asian units after the dollar index jumped to a near-three-year high, while a consistent rise in crude oil prices further weighed on appetite.The rupee was closed at 71.65 to dollar, against 71.40 closed this week. The currency depreciated 0.35% this week, after remaining little changed for three consecutive weeks.

India's foreign exchange reserves rose to $476.09 billion as of Feb. 14 from $473 billion a week earlier, the Reserve Bank of India (RBI) 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 sharply Friday, paced by losses against the pound and yen following data showing the key U.S. services sector unexpectedly contracted, signaling potential trouble ahead of the U.S. economy. The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell to 99.34. But the world's reserve currency remains on track to round off the week at nearly five-months highs.

U.S. business activity in both the manufacturing and services sectors stalled in February as companies have grown increasingly concerned about the coronavirus. The services sector new business index dropped to 49.7, the lowest since October 2009, from 52.5 last month, The manufacturing sector barely escaped a slip into contraction, with the flash reading there at 50.8, the lowest since August and down from 51.9 in January.

The number of Americans filing for unemployment benefits rose modestly last week, suggesting sustained labor market strength that could help to support the economy amid risks from the coronavirus. Initial claims for state unemployment benefits increased 4,000 to a seasonally adjusted 210,000 for the week ended Feb. 15.

U.S. homebuilding fell less than expected in January while permits surged to a near 13-year high, pointing to sustained housing market strength. Data for December was revised up to show homebuilding rising to a pace of 1.626 million units, the highest level since December 2006, instead of surging to a rate of 1.608 million units as previously reported.

U.S. producer prices increased by the most in more than a year in January, boosted by rises in the costs of services such as healthcare and hotel accommodation.The Labor Department said on Wednesday its producer price index for final demand jumped 0.5% last month, the largest gain since October 2018, after climbing 0.2% in December.

Business activity in the euro zone accelerated more than expected this month, a business survey showed on Friday, IHS Markit's Euro Zone Composite Flash Purchasing Managers' Index (PMI), seen as a good gauge of economic health, rose to 51.6 in February from January's final reading of 51.3.

Germany's private sector expanded steadily in February as growth in services activity slowed but still made up for an easing recession in manufacturing, IHS Markit's flash composite Purchasing Managers' Index (PMI), which tracks the manufacturing and services sectors that together account for more than two-thirds of the economy, edged down to 51.1 from 51.2 the previous month.

U.K. inflation picked up for the first time in six months, boosted by the cost of energy, motor fuel and air fares. Consumer prices rose a stronger-than-forecast 1.8% in January from a year earlier, the fastest since July, the Office for National Statistics said Wednesday. Core inflation picked up to 1.6%.

The number of people in work in Britain jumped again in the last three months of 2019, The number of people in work jumped by 180,000 to 32.934 million, at the top end of forecasts in a poll of economists. Full-time employment accounted for most of the growth while self-employment also rose strongly, the Office for National Statistics data showed.

A gauge of how Britons feel about their household finances hit its highest level on record this month, The IHS Markit Household Finance Index jumped to 47.6 in February from 44.6 in January, the highest index reading since the survey began 11 years ago.

Japan's factory output likely slowed in January and retail sales fell for a fourth straight month, Industrial output is projected to have risen 0.2% in January from the previous month, the poll found, well below a revised 1.2% gain in December, The poll also showed retail sales fell 1.1% in January from a year ago, following a 2.6% drop in December.

Japan's machinery orders tumbled at their fastest pace since 2018 while exports posted a 14th straight month of decline as the world's third-largest economy grappled with the widening impact of the coronavirus outbreak and a recent sales tax hike. exports fell 2.6% year-on-year in January, smaller than a 6.9% decrease expected by economists.

Japan’s economy lurched toward a possible recession after taking another battering from a sales-tax hike in the last quarter, Japan’s gross domestic product shrank at an annualized pace of 6.3% from the previous quarter in the three months through December, the biggest slide since a previous tax increase in 2014.

New bank loans in China rose more than expected to a record high in January, Banks extended a record 3.34 trillion yuan ($476.42 billion) in new yuan loans in January, up from 1.14 trillion yuan in December and exceeding expectations.

Local Market

Indian shares ended a tick lower as comparison to the previous week. Nifty closed at 12,080 while last week it closed at 12,113. Sensex closed this week at 41,170 while last week it closed at 41,257. Cipla Ltd, which ended down 2.6%, lost the most in the Nifty 50 index, while IndusInd Bank was the top gainer at 3.5%.

Indian stocks were mostly unchanged on Thursday as investors awaited more clarity on U.S. President Donald Trump's statement ahead of his visit to India that the two countries were working on a major trade deal. The domestic markets remain closed for Shivratri holiday on Friday and Trump's visit will begin on Monday. Trump has said that he was not sure if the trade deal with India would be completed before the U.S. presidential election in November.