Indian rupee appreciated 0.7% this week

Indian rupee appreciated 0.7% this week

27 Jun 2020 11:42 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee logged its biggest weekly rise against the U.S. currency in eight weeks, boosted by corporate dollar inflows from Jio Platforms’ stake sale and strong local shares. The unit gained 0.7% this week, its biggest weekly rise since the week ended May 1, and after falling by an aggregate of 0.8% in the past two weeks. Rupee closed this week at 75.64 compare to the previous week close of 76.18.

India's foreign exchange reserves fell for the first time in eight weeks to $505.57 billion on Jun. 19, down from a record high of $507.64 billion at the end of the prior week, the Reserve Bank of India said. Foreign currency assets fell to $467.04 billion from $468.74 billion in the previous week.

Global Market

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies was down by 0.2% this week and closed at 97.50 compare to the previous week close of 97.67. For the week, index traded between the range of 96.37 to 97.71.

U.S. exports sank to the lowest in more than a decade while imports dropped as the coronavirus continued to curtail demand for goods and upset producers’ supply chains. Goods exports plummeted 5.8% in May from the prior month to $90.1 billion, the lowest since August 2009, according to Commerce Department data released Thursday. Imports decreased 1.2% to $164.4 billion.

The number of Americans seeking unemployment benefits was higher than forecast for a second straight week, adding to signs that the recovery is cooling amid a pickup in coronavirus cases. Initial jobless claims in regular state programs fell to 1.48 million last week from an upwardly revised 1.54 million in the prior week.

U.S. business activity contracted for a fifth straight month in June, but the pace of decline eased, supporting views that the recession caused by the COVID-19 crisis was drawing to an end. Data firm IHS Markit said on Tuesday its flash U.S. Composite Output Index, which tracks the manufacturing and services sectors, rose to a reading of 46.8 last month from 37 in May. A reading below 50 indicates contraction in private sector output. The economy slipped into recession in February.

German business morale posted its strongest rise in June since records began and Europe's largest economy should return to growth in the third quarter after the coronavirus pandemic hammered output in the spring, the Ifo institute said. Ifo said on Wednesday its June survey of companies showed the business climate index surging to 86.2 from an upwardly revised 79.7 in May - the largest surge since records started after reunification in 1990.

Euro zone consumer confidence jumped more than expected in June, a flash estimate from the European Commission showed, as governments gradually eased lockdown restrictions imposed in March against the COVID-19 pandemic. The Commission's flash consumer confidence indicator for the 19 countries sharing the euro improved by 4.1 points to -14.7 in June. Economists polled had expected an improvement to -15.0 in June.

Britain's private sector shrank less than expected this month as more businesses restarted work after the COVID-19 lockdown, putting the economy on course to return to growth from next month, a survey showed on Tuesday. The IHS Markit/CIPS flash composite Purchasing Managers' Index (PMI), which measures activity in the services sector and manufacturing, jumped to 47.6 in June from 30.0 in May.

China’s central bank said on Monday that its benchmark lending rate for June would remain unchanged from the previous month, in tune with market expectations. The People’s Bank of China's (PBOC) 1-year loan prime rate held steady at 3.85%, while the 5-year loan prime rate remained at 4.65%, the second month in a row in which the rate remained unchanged.

Local Market

Indian stocks ended higher in volatile trading on Friday, helped by information technology and energy shares, although investors remained nervous about rising coronavirus cases and tensions with China. Both the indexes rose more than 1% this week and recorded a second straight week of gains. Nifty closed at 10,383 while Sensex ended this week at 35,171.27 against the previous week close of 10,244 and 34,731.73 respectively.

Crude oil production in India fell 7.06% in May from a year earlier due to lower output by all major explorers such as Oil & Natural Gas Corp and Oil India Ltd. following a nationwide lockdown to curb the spread of the novel coronavirus, data issued by the ministry of oil and natural gas. Total production fell to 2,602.40 thousand metric tons, or TMT last month from about 2,800.05 TMT in the same period last year, the data showed. The production is also 3.46% lower than the target production for the month of May.