The Indian Rupee (INR) will benefit from the Greece bailout extension as risk comes back into the market. Read our analysis on FIIs will continue their equity purchases on the back of higher risk appetite and on the back of expectations of a good budget for fiscal 2015-16.
USD on weekly basis ended flat due to mixed U.S. data and on Greece concerns. The USD Index (DXY), which tracks the movement of the USD against six currencies was marginally up by 0.06% in the last week and on yearly basis the index is up by 17.40%.
USD started the week with a fall as Federal Reserve Bank of New York said that U.S. general business conditions index decreased to 7.8 in February against the expectation of 8.5. U.S industrial production increased by 0.2% in January which was below the expectation of 0.3% increase.
US Jobless claims for the week ending 14th February rose by 21,000 to 283,000 from the previous week’s revised total of 304,000, against expectations of 11,000 decline to 293,000.
Fed’s January 2015 meeting minutes released on Wednesday showed that officials were not in a rush to raise interest rates as raising interest rates too soon could dampen the U.S. economic recovery.
Euro depreciated on weekly basis against USD by 0.11%. Euro declined in the early part of the week but on Friday it rose by 0.11% against USD paring its weekly decline after the Eurozone and Greek government arrived at a consensus resulting in Greece getting four months extension to its bailout in order to negotiate a longer-term arrangement with its creditors. Eurozone approved the extension of Euro 240 billion (USD 273 billion) bailout program. Greece’s current bailout is due to expire on 28th February.
Brazilian Real dropped to its lowest level in a decade as it declined by 1.21% against the USD last week and on yearly basis it has depreciated by 18.25%. The currency came under pressure on the concern that country’s GDP will shrink in 2015 by 0.42% as per the central bank survey, which will be the first annual contraction since 2009.
Russian Ruble appreciated for the third consecutive week due to modest rise in oil prices, Ukraine stabilization and end-of-month tax period. On weekly basis Ruble appreciated by 2.23% against the USD. (Crude Oil (Brent) is at 60.22 USD/bbl).
Asian currencies were majorly down on weekly basis against the USD. Japanese Yen declined by 0.24%, South Korean Won declined by 1.37%, Indonesia Rupiah declined by 0.21%, Indian Rupee marginally declined by 0.04% and Chinese Yuan declined by 0.25% whereas Australian Dollar rose 1.03%, Philippines Peso rose by 0.09% and Thai Baht rose by 0.12%.
Japanese Yen declined despite posting strong trade data for January. Exports grew, for the fifth consecutive month, by 17% to 6.14 trillion Yen while imports fell by 9% to 7.32 trillion Yen leading to a trade deficit of 1.18 trillion Yen, which was below the market expectation of 1.68 trillion Yen and well down from 2.8 trillion Yen seen a year ago.