Japanese Yen depreciated by 0.68% on weekly basis against the USD as the country posted weak economic data. Japan’s consumer-price inflation slowed for a fourth consecutive month, real wages declined the most since 2009, factory output unexpectedly fell and household spending remained weak. Core consumer price index (CPI), which excludes fresh food but includes oil products, rose 2.7% in November from a year earlier versus 2.9% in October. CPI adjusted for sales tax increase rose 0.7% in November from 0.9% levels seen in October. Real wages dropped 4.3% in November from a year earlier and is the 17th straight decline and the steepest tumble since December 2009. Industrial production shrank by 0.6% against a median estimate of a 0.8% increase.
Japan’s government on Saturday approved stimulus spending package worth USD 29 billion (3.5 trillion yen). The package was unveiled two weeks after a huge election victory by Prime Minister Shinzo Abe. The government said that it expects the stimulus plan will increase Japan’s gross domestic product by 0.7%.
The USD Index (DXY), which tracks the movement of the USD against six currencies, rose by 0.48% in the last week and on yearly basis the index is up by 11.86%. DXY index hovered around nine year high levels as the U.S. economy grew by 5% in the third quarter of 2014, which is the quickest pace in 11 years. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 0.6% in November after gaining 0.3% in October and in the third quarter grew by 3.2%.
US Jobless claims for the week ending 20th December fell by 9,000 to 280,000 from the previous week’s revised total of 289,000, the fourth straight week of decline in claims. Economists had expected initial jobless claims to fall to 287,000 last week.
Real depreciated by 0.36% last week against the USD. Real found support after Brazilian Central Bank President Alexandre Tombini announced last week that the bank will continue its program of regularly auctioning currency-swap contracts in 2015. The Central Bank said that Brazil will offer USD 50 million to USD 200 million in daily currency swaps. The currency has tumbled this month to a nine-year low level and has depreciated by 13.41% on yearly basis against the USD.
Russian Ruble posted weekly gain of 10.26% against the USD. Ruble started its five-day rally after the Russian Government and Central Bank had instructed state-controlled exporters to cut their foreign-currency holdings by March 2015 to levels no higher than they were on October 2014. This step will let the bank to get easy access to USD and Euro.
Central Bank of Russia‘s foreign currency reserves fell below USD 400 billion for the first time since the 2009 financial crisis and stood at USD 398.9 billion as of 19th December.
On Friday last week, Ruble ended its five day rally and pared its weekly gain by 2.37%. Friday decline came on speculation that measures taken by the Government and Central Bank won’t be enough to stabilise the economy as the country stares at recession. Standard & Poor’s on 23rd December said that there is at least a 50% chance that it will cut Russia’s sovereign credit rating to below investment grade within 90 days, highlighting sanctions imposed by US and EU over the Ukraine conflict and slumping oil prices.
Asian currencies showed mixed trend on weekly basis against the USD. Australian Dollar declined by 0.11%, Japanese Yen declined by 0.68%, Indian Rupee declined by 0.42% and Thai Baht declined by 0.16% whereas South Korean won rose by 0.29%, Philippines Peso rose by 0.16%, Indonesia Rupiah rose by 0.70% and Chinese Yuan rose by 0.13%
Indian Rupee depreciated on account of USD buying by importers, mainly oil refiners, to meet their month-end requirements and on capital outflows. Foreign portfolio investors continued their selling of equities that started on 9th December. As per SEBI data, Foreign Investors sold shares worth USD 454.18 million in the last week.