THE RUPEE: mixed trend

The rupee moved both ways in terms of dollar on the currency market during the week ended on May 14, 2011. On the interbank market, the rupee retained its level versus dollar for buying and selling at 85.20 and 85.25.
On the open market, the rupee lost 40 paisa versus US currency for buying and selling at 85.15 and 85.30. The rupee managed to gain 91 paisa in relation to euro for buying and selling at Rs 119.69 and Rs 129.19.
Despite high demand for dollars, the rupee resisted sharp fall on the interbank market but it failed to perform on the open market. It is expected that the rupee would come under pressure this week due to higher demand for dollars by importers.
It was observed that payment requirements pushed up the demand for dollars and this factor caused decline in rupee value.
As a result of high demand for dollars, the country's foreign exchange reserves also fell to 17.01 billion dollars.
INTER-BANK RATES: On Monday, the rupee gained five paisa in relation to dollar for buying and selling at 85.15 and 85.20.
On Tuesday, the rupee picked up 46 paisa against dollar for buying and selling at 84.69 and 84.74.
On Wednesday, the rupee lost 21 paisa versus dollar for buying and selling at 84.90 and 84.95.
On Thursday, the rupee recovered 16 paisa versus dollar for buying at 84.74 and 17 paisa for selling at 84.78.
On Friday, the rupee lost 36 paisa in relation to US currency for buying at 85.10 and 37 paisa for selling at 85.15.
On Saturday, the rupee lost 10 paisa versus dollar for buying and selling at 85.20 and 85.25.
OVERSEAS OUTLOOK FOR DOLLAR: In the first day of Asian trade, the euro bounced back as some funds scooped it up after a steep drop over previous week but speculators' bloated long positions in the currency pointed to a risk of further falls even after policymakers denied a report that Greece might consider quitting the euro zone. A rebound in various commodity prices after their rout previous week also helped to pull up the euro from its three-week low and lifted commodity currencies.
But traders were not sure if the worst was yet over for commodities, and said that the euro looked vulnerable after the European Central Bank quelled expectations of a rate hike in June.
The yuan closed little changed on dollar as a sharp rebound in the US dollar index raised investor concerns over how much the People's Bank of China might allow yuan to appreciate.
Before trading began, the PBOC fixed the yuan's daily mid-point versus dollar at a record high but traders said the fixing was not a show of determination to let yuan rise irregardless of global market conditions.
Interbank buy/sell rates for taka against dollar on Monday were 73.16/73.17 (previous 73.10/73.17), and Call Money Rates 5.00-7.00 percent (previous 4.75-7.25 percent). Indian rupee was available at Rs 44.66 versus dollar and Malaysian ringgit was at 2.9855.
In the second Asian trade, the euro wobbled near a three-week low against US dollar, smarting from renewed worries about indebted euro-zone countries and whether a bailout plan for Greece would be sustainable.
The common currency, which hit a six-week low against the Japanese yen and a one-month low against the British pound, was also hobbled by fears of a commodities rout after oil prices fell in the wake of the CME Group's hike in trading margins for US crude futures.
"In the short-term, there could be more unwinding of euro/dollar long positions due to negative news on fringe euro zone countries' debt problems," said Junya Tanase, FX strategist at J P Morgan Chase Bank.
The euro fell 0.25 percent in Asian trade to $1.4327, edging closer to a three-week low of $1.4254 hit the previous day. The yuan ended a tad up against dollar but did not hit a new peak after People's Bank of China set a record high mid-point, with the market wary of a possible pullback following US-China talks. The jitters were mainly propelled by a sharp rebound of dollar in global markets, traders said.
Interbank buy/sell rates for taka against dollar were 73.10/73.20 (previous 73.16/73.17), and Call Money Rates 4.75-6.75 percent (previous 5.00-6.75 percent). Indian rupee was trading at Rs 44.72 versus dollar and Malaysian ringgit was available at 2.9835.
In the third Asian trade, the euro clung to its gains of the past few days, helped by stabilising commodity prices and speculation about another Greek aid package, but a further foray to the upside was seen to be filled with obstacles such as the chance of negative news on the prospects of the euro zone's efforts to help Greece and other financially strained countries.
The risk-sensitive euro and the Australian dollar dropped briefly after data showing Chinese industrial production and retail sales fell short of market expectations, but they quickly pared losses as China shares recovered.
The yuan finished down against dollar, but traded firmer than the record high mid-point set by People's Bank of China on expectations it might continue its ascent after stronger-than-expected inflation.
Indian rupee was trading at Rs 44.74 versus dollar and Malaysian ringgit at 2.9795.
In the fourth Asian trade, the dollar dipped but held near a three-week high against a basket of currencies as a rout in commodities and an uncertain outcome on Greece's debt problems lowered risk appetite and prompted traders to expect more unwinding of dollar-funded bets on risk assets, with its break above a trendline pointing to the chance of more gains.
The euro, bruised by concern that the problems in Greece, could spin out of control despite policymakers' efforts to support it, hovered just above a three-week low against the dollar after having broken below its 55-day moving average, and touched a 1-1/2 month low against pound.
The yuan ended down against dollar after People's Bank of China set a weaker mid-point as dollar held near three-week highs.
But traders said a fall of several pips in the yuan mid-point lagged far behind a nearly 1 percent rally in dollar index, reflecting that a momentary retreat in yuan from record highs would not affect its longer-term uptrend as China uses the exchange rate to beat back inflation.
Indian rupee was trading at Rs 44.68 versus dollar and Malaysian ringgit was available at 2.996.
Interbank buy/sell rates for taka against dollar were 73.13/73.23 (previous 73.12/73.18), and Call Money Rates 5.50-6.75 percent (previous 5.50-6.75 percent).
In the final session, the euro fell against dollar but remained above a six-week low, finding some respite after commodities bounced off their overnight lows and as investors refocused their attention on prospects for a further rise in euro zone interest rates.
But lingering worries about Greece's debt problems continued to weigh on euro, which had shed roughly 5 percent from a peak near $1.4940 hit in early May.
A recent rout in commodities such as silver and oil also hurt risk-appetite and prompted traders to brace for the possibility of further unwinding of dollar-funded bets on risk assets.
The yuan ended up slightly against dollar on Friday, paring the morning losses as dollar index dropped during early European trade.
Dealers said investors were adopting a wait-and-see attitude and the dollar's performance would likely guide the Chinese currency's movements in the near term as the People's Bank of China would take time to observe the effects of a series of record highs. Indian rupee was trading at Rs 44.98 versus dollar and Malaysian Ringgit at 3.0090.
At the weekend, the US dollar rose to a five-week high against major currencies as renewed worries about possible euro zone sovereign debt restructuring continued to drive a broad pullback from risky trades in commodities, stocks, and high-yielding currencies.
The euro fell against most currencies, dropping to a six-week lows against dollar and yen on renewed concerns Greece may restructure its debt.
European Central Bank President Jean-Claude Trichet also contributed to the euro fall as he dampened expectations about an interest rate rise in the euro zone by saying that inflation was at its peak.
OPEN MARKET RATES: On May 9, the rupee lost 30 paisa against dollar for buying at 85.05 and 30 paisa for selling at 85.25. The rupee followed the same trend in relation to euro, losing Rs 1.49 for buying and selling at Rs 122.09 and Rs 122.59.
On May 10, the rupee gained 40 paisa versus dollar for buying at 84.65 and 45 paisa for selling at 84.80. The rupee , rose 84 paisa in terms of euro for buying at Rs 121.25 and 74 paisa for selling at Rs 121.75.
On May 11, the rupee shed 25 trend in terms of US currency for buying and selling at 84.90 and 85.05. The rupee lost 80 paisa in relation to euro for buying and selling at Rs 122.05 and Rs 122.55.
On May 12, the rupee gained 10 paisa against dollar for buying at 84.80 and five paisa for selling at 85.00. The rupee followed the same pattern versus the euro as it gained Rs 1.55 for buying and selling at Rs 120.50 and Rs 121.00.
On May 13, the rupee lost 30 paisa versus dollar for buying and selling at 85.10 and 85.30. The rupee shed Re 1 in terms of euro for buying and selling at Rs 121.50 and Rs 122.00.
On May 14, the rupee shed five paisa in relation to dollar for buying at 85.15 while it retained its overnight level for selling at 85.30. The rupee gained Rs 1.81 in relation to euro for buying and selling at Rs 119.69 and Rs 119.19.