Euro last week depreciated by 3.82% against the USD. The major decline came after the ECB Executive Board member Benoit Coeure said the bank would buy more securities in May and June to add liquidity in to the system. The weakness in Euro has led the INR to appreciate in the last week by 3.34% against the Euro.
USD last week strengthened against major currencies after posting declines for five consecutive weeks. The gain was largely attributed to the release of upbeat US housing data and ECB front loading of QE. USD Index (DXY), which tracks the movement of the USD against six currencies, posted a gain of 3.09% last week
USD started the week on a slightly low note because of weak US data, which was released in the week prior to last week and this had raised expectations that the Fed will wait longer to raise U.S. interest rates. But on Tuesday, USD strengthened after the report released by U.S. Commerce Department showed that U.S Housing starts data rose by 20.2% in April against expectations of 9.9% gain, to 1.135 million units from 944,000 units in March.
The Fed’s 28th-29thApril minute’s release last week had no major surprises and did nothing to change the market expectations on rising interest rate.
U.S. Department of Labour on Thursday reported that number of individuals filing for initial jobless benefits in the week ended 16th May rose by 10,000 to 274,000 from the previous week’s total of 264,000 and against expectations of a rise of 7,000 to 271,000.
Brazilian Real depreciated by 3.14% against the USD as fiscal concerns mounted. Recent release of weak economic data raised concerns over the ability of the government to meet its budget target. Brazil’s unemployment rate rose in April to its highest in nearly four years to 6.4% from 6.2% in the previous month, while economic activity weakened more than forecast in March.
Russian Ruble depreciated by 0.94% against the USD. Ruble came under pressure after Russian Central Bank purchased foreign currency to top up its reserves in order to take advantage of this year’s Ruble gains. Brent Crude oil in the last week declined by 2.16% from 66.81 USD/bbl to 65.37 USD/bbl.
Asian currencies were down broadly against the USD last week. Australian Dollar declined by 2.63%, Japanese Yen declined by 1.88%, South Korean Won declined by 0.41%, Philippines Peso declined by 0.19%, Indonesia Rupiah declined by 0.56% whereas Chinese Yuan rose by 0.15%.
Indian Rupee was flat against the USD and appreciated by 3.34% against the Euro. INR in the early part of the week depreciated against the USD after the release of upbeat US housing data and by selling of USD by some banks and exporters but later it recovered after the release of Fed’s minutes, which signalled that the Fed is unlikely to raise interest rates in June.