Indian rupee appreciated 0.4% this week

Indian rupee appreciated 0.4% this week

28 Mar 2020 10:17 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee logged its first weekly rise in six weeks against the U.S. currency, tracking a sharp fall in dollar index due to weak U.S. jobs data and the Federal Reserve's unlimited quantitative easing pledge. The unit was up 0.4% this week, its biggest weekly rise since the week ended Jan. 10, after falling by an aggregate of 5.4% in last five weeks.The rupee closed this week at 74.89 against the previous week close of 75.18.

India’s foreign exchange reserves fell for the second consecutive week and stood at $469.91 billion as of the week ended Mar. 20, down from $481.89 billion at the end of the prior week, the Reserve Bank of India said.The reserves fell by $11.98 billion, the largest weekly decline since October 2008, according to data from RBI. The reserves had gained for 24 weeks through early March to record high of $487.24 billion.

Global Market

The dollar posted its biggest weekly decline in more than a decade on Friday, as trillions of dollars worth of stimulus efforts by governments and central banks helped temper a rout in global markets driven by the coronavirus pandemic. The dollar dipped 0.87% against a basket of currencies Friday to 98.41. It fell 3.90% this week - its biggest weekly decline since March 2009.The dollar index last week had racked up its biggest weekly gain since the financial crisis.

U.S. consumer sentiment dropped to near a 3-1/2-year low in March as the coronavirus epidemic upended life for Americans, The University of Michigan's Consumer Sentiment Index fell to a reading of 89.1 this month, the lowest level since October 2016, from a final reading of 101.0 in February. It was the largest monthly drop in the index since October 2008.

Initial claims for unemployment benefits rose 3.00 million to a seasonally adjusted 3.28 million in the week ending March 21, eclipsing the previous record of 695,000 set in 1982, the Labor Department said. That also dwarfed the peak of 665,000 in applications during the 2007-2009 recession, during which 8.7 million jobs were 88.9, the highest since July, data showed Friday.

Sales of new U.S. single-family homes fell in February after surging in the prior month, and could decline further because of the coronavirus pandemic, The Commerce Department said on Tuesday new home sales dropped 4.4% to a seasonally adjusted annual rate of 765,000 units last month.

British retail sales stagnated last month in their weakest performance in nearly seven years, official data showed on Thursday, Sales volumes were flat in February compared with the same month in 2019 after growth of 0.9% in January, the Office for National Statistics said.This was the first time sales have not grown since March 2013, when Britain was hit by the heaviest snowfall in 30 year.

British inflation fell in February, before the coronavirus crisis hit the country, Consumer price inflation fell to 1.7% in February from a six-month high of 1.8% in January, the Office for National Statistics said.

German business morale tumbled in March to its lowest level since 2009, a survey showed on Wednesday, suggesting that Europe's largest economy is heading toward recession due to the impact of the coronavirus. The Ifo institute said final results from its March survey showed that its business climate index slumped to 86.1 from 96.0 in February.

Profits at China's industrial firms slumped in the first two months of the year to their lowest in at least a decade, Profits earned by Chinese industrial firms in the first two months dropped 38.3% from a year earlier to 410.7 billion yuan ($58.15 billion), worsening from a 6.3% fall seen in December last year, the National Bureau of Statistics (NBS) data showed. It marked the steepest decline in data going back to 2010.

Local Market

The NSE Nifty 50 index closed 0.2% higher on friday at 8,660.25, while the S&P BSE Sensex finished the session 0.44% lower at 29,815.15. Still, both indexes recorded their sixth straight week of declines amid historic sell-offs in global stock markets as the virus locks down several countries, raising fears of a deep recession.

The Reserve Bank of India slashed interest rates on Friday, following other central banks that have taken emergency measures  to counter the economic fallout from the fast-spreading coronavirus pandemic. It cut the repo rate by 75 basis points (bps) to 4.40%, exceeding market expectations for a 50 bps cut. The reverse repo rate was reduced 90 bps to 4%. While the entire committee favoured a cut, they differed on the size and voted in a 4-2 split to cut rates by this quantum.