Currency Market Snapshot For The Week
· INR depreciated by 0.15% against the USD last week and appreciated by 0.30% against the euro.
· USD rose by 0.30% on a week on week basis and is at a level of 99.78.
· The British pound appreciated by 0.35% against the USD
· Euro depreciated by 0.57% against the USD.
Global Bond Market Snapshot For The Week
· US 10-year benchmark bond yields fell by 9 bps last week.
· German 10-year bond yields fell by 13 bps, French 10-year bond yields fell by 7 bps.
· Italy’s 10-year benchmark yield rose by 21 bps to 1.79%.
· US benchmark Junk bond yields fell by 44 bps to 7.98%
INR on Thursday hit a new record low level of Rs 76.8675 against the USD on deepening concerns that the coronavirus pandemic could lead to a global economic recession, which weakens the market risk sentiment. Restrictions on travel and congregation of people across the world, to limit the spread of the virus, has brought economic activity in many countries to a near standstill, with supply chains disrupted and slump in consumption.
However, the INR recovered on Friday after Reserve Bank of India Governor Shaktikanta Das announced measures to ensure adequate liquidity in the system to ease the financial stress caused by the COVID-19 pandemic. (Read our analysis on RBI Announcements April 2020)
INR depreciated by 0.15% against the USD last week and appreciated by 0.30% against the euro
USD ended the week higher as market participants sought shelter amid grim U.S. economic numbers fuelling fears of a global recession. Retail sales in the U.S. declined 8.7% on month in March, the steepest on-record fall. Industrial production dropped 5.4% in March, and manufacturing output plummeted 6.3%, the biggest decline since 1946.
USD Index (DXY), which tracks the movement of the USD against six major currencies, rose by 0.30% on a week on week basis and is at a level of 99.78.
The International Monetary Fund said in its first World Economic Outlook report since the COVID-19 coronavirus pandemic began that the global economy is expected to shrink by 3% this year–the biggest contraction since the Great Depression of the 1930s. Further, the Fund also said that the economic growth in Asia will contract to zero this year for the first time in 60 years.
However, USD fell on Friday as investors’ risk appetite got a boost after Gilead Sciences Inc announced that clinical trials of its antiviral drug remdesivir showed promising results in treating the COVID-19 virus
Weekly Global Bond Market Analysis
U.S. 10-year benchmark bond yields fell by 9 bps to 0.64% last week as the number of Americans filing for unemployment benefits soared by 5.25 million last week, the third straight week that jobless claims have topped 5 million. That would push the U.S. unemployment rate to 15%, erasing the gains in a labor market that saw the jobless rate fall to 50-year-lows only two months ago.
Eurozone bond yields were largely mixed last week. German 10-year bond yields fell by 13 bps last week, France 10-year bond yields fell by 7 bps and is at 0.03%. Italy’s 10-year benchmark yields rose by 21 bps.
U.S. benchmark Junk bond yield fell by 44 bps and is at 7.98%. Euro benchmark Junk bond yields fell by 42 bps to 5.64%.