Indian Rupee Depreciated 0.5% this week

Indian Rupee Depreciated 0.5% this week

23 May 2020 11:18 AM

Weekly Synopsis

 Indian Rupee

The Indian rupee fell against the dollar this week as looming worries due to rising diplomatic tensions between the United States and China crimped risk appetite across the region. The unit fell 0.5% this week, Indian rupee closed this week at 75.95 against the previous week close of 75.56.

India's foreign exchange reserves rose for the third straight week to a near record high of $487.04 billion as of the week ended May 15, and against $485.31 billion at the end of the prior week, the Reserve Bank of India said. The reserves had hit a record high of $487.24 billion in the week ended Mar. 6.

Global Market

The U.S. Dollar Currency Index which measures the greenback’s strength against six other major currencies, was down about 0.5% this week and closed at 99.77 against the previous week close of 100.36. For the week, index traded between the range of 99.00 to 100.47.

U.S. business activity shrank less in May than a month earlier as the economy began to emerge from coronavirus-related lockdowns, The IHS Markit composite index of purchasing managers at manufacturers and service providers improved 9.4 points to 36.4, still the second-lowest in records back to 2009.

U.S. home sales logged their biggest drop in nearly 10 years in April as the novel coronavirus pandemic upended the labor market and broader economy, undercutting demand for housing. The National Association of Realtors said existing home sales plunged 17.8% to a seasonally adjusted annual rate of 4.33 million units last month. The percentage decline was the largest since July 2010.

The number of Americans applying for initial unemployment benefits totaled 2.43 million in the week ending May 16, the U.S. Labor Department said Thursday, the smallest increase since March but still remaining at elevated levels. Claims have been gradually decreasing since hitting a record 6.86 million in the week ended March 28.

British consumer confidence in early May dipped back down to its joint-lowest level since the global financial crisis in 2009, despite moves by the government to start loosening its coronavirus lockdown, GfK, a polling firm, said its consumer confidence index - which it is now publishing every two weeks - slipped to -34 in the May 1-14 period from -33 during the second half of April.

Britain's inflation rate sank in April to its lowest since August 2016 as the coronavirus pandemic pushed down global oil prices and clothing stores slashed prices, Consumer price inflation dropped to an annual rate of 0.8%from 1.5% in March, official data showed on Wednesday. That was the sharpest one-month fall in over a decade and took inflation further below the BoE's 2% target.

Euro zone consumer confidence rose by 3.2 points in May from the April number, figures released on Wednesday showed. The European Commission said a flash estimate showed euro zone consumer morale improved to -18.8 this month from -22.0 in April. Economists polled had expected a fall to -24.0.

China's fiscal revenues fell 14.5% on-year in the first four months of the year to 6.213 trillion yuan ($872.76 billion), the country's finance ministry said on Monday. Fiscal expenditures for the January-April period fell 2.7% from a year earlier to 7.36 trillion yuan.

Japan's exports fell the most since the 2009 global financial crisis in April as the coronavirus pandemic slammed world demand for cars, industrial materials and other goods, Ministry of Finance (MOF) data on Thursday showed Japan's exports fell 21.9% in April year-on-year as U.S.-bound shipments slumped 37.8%, the fastest decline since 2009, with car exports there plunging 65.8%.

Local Market

Indian shares ended this week on a lower side, The NSE Nifty 50 index closed this week at 9,039.25, while the S&P BSE closed this week at 30,672.59. Weak risk appetite sent India’s benchmark BSE Sensex down 1.5% this week, compounding last week’s 1.7% fall.

At the end of the week, RBI slashed its key policy rate for a second time this year in an emergency meeting to counter the economic fallout from an ongoing nationwide lockdown to contain the spread of the coronavirus. The central bank cut the repo rate by 40 basis points to 4%. The reverse repo rate was also reduced by 40 basis points to 3.35%.