Indian rupee appreciated 1.3% this week

Indian rupee appreciated 1.3% this week

04 Jul 2020 11:12 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee posted its best weekly gain against the dollar in nine, aided by robust corporate flows and as encouraging economic data from the United States boosted risk appetite. For the week, it rose 1.3%, its biggest weekly rise since the week ended May 1, and adding to last week’s 0.7% climb. Rupee closed this week at 74.63 compare to the previous week close of 75.64.

India's foreign exchange reserves rose to $506.84 billion as of June 26, compared with $505.57 billion a week earlier, the Reserve Bank of India said. 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 U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies was down by 0.4% this week and closed at 97.12 compare to the previous week close of 97.50. This week index traded between the range of 96.80 to 97.80.

U.S. manufacturing activity rebounded in June, hitting its highest level in more than a year as the broader economy reopened, but rising COVID-19 infections threaten the recovery. The Institute for Supply Management (ISM) said on Wednesday its index of national factory activity jumped to a reading of 52.6 last month from 43.1 in May. That was the strongest since April 2019 and ended three straight months of contraction.

U.S. consumer confidence grew more than expected in June, strengthening views that the economic downturn was likely over, though rising COVID-19 infections threatened to derail the budding recovery. The Conference Board said on Tuesday its consumer confidence index rose to a reading of 98.1 this month from a downwardly revised 85.9 in May. Economists polled had forecast the index would rise to 91.8 in June.

Unemployment in the euro zone edged up only slightly and by less than expected in May as lockdowns gradually eased, The seasonally adjusted rate increased to 7.4% in May from 7.3% in April and 7.1% in March, the lowest level since records began in 1998. May brought the second consecutive monthly rise, but it was less than the market expectation of 7.7%.

German retail sales rose sharply in May, data showed on Wednesday, reflecting a rebound in private consumption as Germany lifted restrictions imposed to stop the spread of the coronavirus. Retail sales rose by 13.9% on the month in real terms after a downwardly revised drop of 6.5% in April.

The historic collapse in British manufacturing caused by the coronavirus lockdown abated in June as companies reported a small increase in output, a survey showed on Wednesday. The IHS Markit/CIPS UK manufacturing Purchasing Managers' Index (PMI) rose to 50.1 from 40.7 in May, unrevised from a preliminary reading and creeping back above the 50 line that signifies growth for the first time since February.

China's services sector expanded at the fastest pace in over a decade in June as the easing of coronavirus-related lockdown measures revived consumer demand, The Caixin/Markit services Purchasing Managers' Index (PMI) rose to 58.4, the highest reading since April 2010, from May's 55.0, pulling further away from the trough hit in February as the coronavirus lockdown paralysed the economy.

Japanese new auto sales dropped by nearly a quarter in June from a year earlier as consumers continued to hit the brakes on car purchases in the wake of the coronavirus outbreak, Total vehicle sales fell 23% in June from the same month a year earlier to 347,371 units, according to data from the Japan Automobile Dealers Association .

Local Market

Indian shares ended at near four-month highs on Friday, boosted by Reliance Industries Ltd after Intel Corp agreed to invest in the Asian conglomerate's digital unit, although a record spike in domestic COVID-19 cases curbed gains. Both indexes notched their third straight weekly gain. Nifty closed this week at 10,607.35 while Sensex ended this week at 36,021.42 against the previous week close of 10,383 and 35,171.27 respectively.

India's crippled services industry, the lifeblood of economic growth and jobs, contracted sharply in June as an extended lockdown imposed to stop the spread of the coronavirus stalled business activity, Although the pace of decline moderated from May - the Nikkei/IHS Markit Services Purchasing Managers' Index jumped to 33.7 in June from May's 12.6 - it remained a long way from the 50-mark separating growth from contraction.