Rupee continues depreciation in the 4th session of the week as dollar demand remains from the importers for month end payments. Strong U.S. economic readings have already weakened emerging market currencies.
The depreciated more than expected after FOMC statement which said that Fed is patient to hike interest rate but the committee is likely to increase interest rate next year as economy improves. Later the weakness was observed in all emerging market assets.
This week U.S. Bureau of Economic Analysis reported improvement in Gross Domestic Product by 5% against the expectation of 4.3%. Last reading of GDP was 3.9%. Escalated growth of U.S. economy encouraged equity markets globally.
With GDP data Census Bureau of U.S. published Core Durable Goods orders which fell by 0.4% from earlier -1.1%. Durable goods orders also posted negative growth of 0.7% from earlier 0.3%.
Later on the day Bureau of Economic Analysis released Personal Spending and Personal Income reports. Both data improved against last reading. Personal Spending increased by 0.6% from last 0.3% and Personal Spending increased by 0.4% from 0.3%. Last week less people have applied for Jobless claims that fell to 280k from earlier 289k.
Government has passed ordinance on Coal and Insurance. There was not seen any effect of the news on currency market. If the Govt sells its stake of state-run and private companies then we may see good foreign fund inflow. Rupee is depreciating even after low market activity due to Christmas holidays.
We may see weakness in rupee in coming days until there come solid improvement in manufacturing or service sector or FII invest heavily in our market.