WEEKLY SYNOPSIS: 16/10/2020
Currency Map:
| Currency Pairs | WEEKLY CLOSE | PRIOR WEEK CLOSE | % change |
| USD/INR | 73.32 | 73.13 | 0.25 |
| EUR/INR | 85.91 | 86.28 | -0.42 |
| GBP/INR | 94.87 | 94.60 | 0.28 |
| JPY/INR | 69.56 | 69.15 | 0.59 |
Brent Crude closed at USD 42.80VS prior week close of USD 42.50. Gold closed at USD 1902.
Nifty closed at 11762 vs prior week close of 11914.
10 Year G-SEC Yield closed at 5.94%.
Major developments: USDINR traded in the 73.05-73.46 range and closed at 73.32 as against prior week close of 73.13, declined of 0.25% for Rupee w/w. EUR declined 0.42% and GBP climbed 0.28% against Rupee. Indian benchmark Equity indices declined 1.27% w/w basis. 10 Year G-SEC Yield closed at 5.94%.
Rupee and Equity markets were choppy. IMF predicted that Indian GDP will contract around10% this year. This is very close to RBI estimate of -9.5% GDP contraction. However, demand seems to have picked up to 90% of pre pandemic levels in many sectors. Rebound is expected to be uneven and bumpy.
Indian IIP contracted 8% in Aug and retail inflation was higher at 7.34% in Sept. Food inflation was higher at 10.68%. Aug inflation was at 6.68%.
Mfrg sector contracted 8.6, mining contracted 9.8% in Aug.
FM announced festival advance of Rs 10000 and encashment of leave travel allowance. However, the amount will have to be spent on purchase of non food items. This is aimed at boosting consumer demand. Central Govt has also decide to borrow 1.1 trn to pay States as part of GST compensation. This will be reflected as Capital receipts in state accounts.
FII’S nett bought Rs 9047 Cr ofIndian Equities in Oct . FII’S nett bought Rs 296 Cr of Indian debt securities in Sept . In this financial year, FII’S have nett bought Rs 88530 Cr of Equities and have sold Rs 28252 Cr in debt. In FY 19-20, FII’s have sold Rs 10200 Cr of Equities and 47393 cr of debt.
Global developments:Surging Corona infections in Europe and stalled fiscal stimulus talks in US were the highlights of last week developments. Equity markets tuned choppy and USD gained against Euro.
US retail sales beat expectations, but EU Zew survey indicated fading euphoria after an ebullient rebound of activity in Aug and Sept. France and UK have imposed specific lock downs to tame infection.
IMF estimates Global GDP contraction of -4.4% this year and a rebound to 5.2% growth next year.
ECB President Christine Lagarde said Europe’s recovery is ” incomplete, uncertain, uneven.” EU exports declined -12.2% y/y and imports declined -13.5% y/y in Aug.
Focus is on US election and the stimulus policies of the new President.
Important developments in coming week: Global PMI surveys
Currency range forecast: USDINR:73/72.70(support)-73.50/74(Resistance), EURINR: 85.50(support), GBPINR: 93.25(support), JPYINR: 68-71.
Suggestion: Cover USD import payables on decline to 73.05. USD receivables can be hedged at 73.80-74.40+.EURINR payables can be hedged at 85.75-86. GBPINR receivables hedging can be done on rally to 97-99 levels.
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