THE RUPEE: dollar higher

The dollar, during the week, ended on July 16, 2011, breached the barrier of Rs 86 due to extended buying by importers to clear the bills. In the interbank deals, the rupee lost 17 paisa versus dollar for buying at 86.07 and 15 paisa for selling at 86.10.
On the open market, the dollar was unchanged at Rs 86.10 and Rs 86.30 for buying and selling, respectively. However, the rupee posted a gain of 94 paisa in terms of euro for buying and selling at Rs 121.44 and Rs 121.94.
Some analysts were of the opinion that the rupee showed weakness versus dollar due to payment requirements by the importers. As a result, the foreign exchange reserves dropped to 18.107 billion dollars during the week as compared with the previous record figure to 18.247 billion dollars.
In the meantime, it looked that the rupee may be able to tackle with emerging demand by the importers, particularly by small investors. In addition, the State Bank of Pakistan (SBP) reported that the poor law and order situation in the country pushed the foreign direct investment (FDI) down by 26.8 percent to 1.573 billion dollars during the 2010-11 against 2.15 billion dollars in 2009-10.
Trading activity was marred by rising violence in the city and causing uncertainties over the political situation in the country. The deteriorating law and order situation on the back of political conflicts could discourage the inflows and mount pressure on the domestic currency.
For the last many days, trade and social activities had been near collapsing in the city due to law and order situation. In the middle of the week, the Karachiites were again in the grip of fresh episode of violence. The economic hub of Pakistan was again in the uncertainties after a minister' shawkish statement about rival political party.
These opportunist politicians are busy in playing games but the question is why always the nation comes to face any kind of ugly incidents.
INTER-BANK MARKET: On Monday, the rupee fell four paisa in relation to dollar for buying at 85.94 and three paisa for selling at 85.98. On Tuesday, the rupee on easy supply of dollars recovered 14 paisa for buying at 85.80 and 13 paisa for selling at 85.85. On Wednesday, the rupee shed two paisa versus dollar for buying at 85.82 while it gained one paisa for selling at 85.84.
On Thursday, the rupee shed 11 paisa in terms of dollar for buying and selling at 85.93 and 85.95. On Friday, the rupee shed five paisa in relation to dollar for buying at 85.98 and seven paisa for selling at 86.02.
On Saturday, the rupee fell by nine paisa in relation to dollar for buying at 86.07 and 8 paisa for selling at 86.10.
OVERSEAS CURRENCY OUTLOOK: In the first Asian trading, euro fell to fresh two-week lows versus Swiss franc and US dollar in the lead up to an emergency meeting among European leaders worried that the debt crisis was spreading to Italy, the region's third largest economy.
Italian bond yields soared to euro lifetime highs on Friday, raising fears that Italy, with the highest sovereign debt ratio relative to its economy in the euro zone after Greece, could be the next to suffer in the crisis.
The Financial Times reported that some EU leaders were considering to allow a selective default by Athens to put its debt on a more sustainable footing.
The euro last traded at $1.4213 compared with $1.4245 late in New York on Friday, having dipped to an early low around $1.4200. Traders noted buying interest near $1.4180, which should help keep intact the $1.4190-1.4210 support area for now.
Indian rupee was trading at Rs 44.33 versus dollar, Malaysian ringgit at 3.0035, and Chinese yuan trading at 6.4658.
Inter bank buy/sell rates for taka against dollar were 74.45/74.47 (previous 74.30/74.39), and Call Money Rates 9.00-12.00 percent (previous 9.00-12.00 percent.
In the second Asian trade, euro plunged to a record low versus Swiss franc and sinking to a four-month trough against dollar on growing concerns that euro zone's sovereign debt crisis was spreading.
The single currency fell as low as $1.3932 - its lowest since March 17 - after a slew of stop-loss orders were triggered below $1.3980. The euro fell broadly, dropping to an all-time low of 1.1660 Swiss franc.
The euro was on the defensive as an emergency meeting by European financial officials failed to offer fresh measures to tackle the region's debt problems, dealers said.
Market participants were especially concerned about the debt of countries such as Spain and Italy, which came under strong selling pressure the day before.
Global stocks dropped and euro sank on Monday as worries that Italy could become the latest country caught up in the euro zone debt crisis caused investors to snap up safe-haven US Treasury debt. Analysts said that market players were looking towards a pair of government reports.
The first would be the US Agriculture Department's weekly crop progress report, due out later on Monday, and then the USDA's monthly supply/demand data on Tuesday.
Indian rupee was trading at Rs 44.48 versus dollar, Malaysian ringgit at 3.0315, and Chinese yuan was at 6.474.
Inter bank buy/sell rates for taka against dollar were 74.47/74.49 (previous 74.45/74.47), and Call Money Rates 10.00-12.00 percent (previous 9.00-12.00 percent).
In the fourth Asian trade, US dollar was on the run after a ratings warning from Moody's and a hint of further policy easing from the Federal Reserve unleashed a wave of panic selling, much to the relief of the hard-pressed euro.
As fiscal problems hurt not just the euro but also the dollar, traders looked to Swiss franc as a likely safe haven for investors, boosting the currency to a record high against dollar and euro.
Indian rupee was trading at Rs 44.52 versus dollar, Malaysian ringgit at 3.0015, and Chinese yuan at 6.459.
In the final Asian trade, the dollar steadied in Asia on Friday after the impact from a Standard and Poor's warning that it could cut US credit ratings was short-lived, and investors bought back the US currency as they shifted their focus to stress tests on European banks.
The ratings agency warned there was a one-in-two chance it could cut US ratings if no deal was reached on raising the government's debt ceiling.
The dollar briefly came under selling pressure, but the impact was short-lived, perhaps because Moody's had already raised the possibility of a downgrade. Dealers said the market might also be hoping that the pressure from the agencies would jolt US lawmakers into doing a deal.
The yuan closed down slightly versus the dollar on Friday as the People's Bank of China pulled the yuan's mid-point back from a record high, suggesting the authorities may temper the currency's pace of appreciation, traders said.
Indian rupee was trading at Rs 44.50 versus the dollar and Malaysian ringgit was at 3.0025 in terms of the US currency.
At the week-end, the euro zone debt crisis and its impact on bank balance sheets weighed on the euro and is likely to do so again next week.
Meanwhile the possibility that the US Congress will fail to raise the government's statutory borrowing limit by Aug. 2, which may result in a credit rating downgrade, weighed on the US dollar, particularly against the Swiss franc.
The more investors fear that heavily indebted euro-zone governments will be unable to repay their debts, the more the yields on their bonds rise, dragging down their value in banks' balance sheets, erasing their capital, and increasing the need for yet more bank bailouts by stronger euro-zone governments.
Europe's banks were in the spotlight on Friday when the European Banking Authority released its bank stress-test results, showing eight banks failed a test of their ability to withstand a prolonged recession.
OPEN MARKET RATES: On July 11, the rupee did not show any change for buying at 86.00 while it slipped by 10 paisa for selling at 86.20. The rupee , rose by Rs 1.19 versus euro for buying and selling at Rs 121.19 and Rs 121.69.
On July 12, the rupee held the overnight levels against dollar for buying and selling at 86.00 and 86.20. The rupee rose by Rs 1.43 versus euro for buying and selling at Rs 119.76 and Rs 120.26.
On July 13, the rupee held the overnight levels against dollar for the third day in a row for buying and selling at 86.00 and 86.20. The rupee dropped Rs 1.23 versus euro for buying and selling at Rs 120.99 and Rs 121.49.
On July 14, the rupee held the overnight levels against dollar for the fourth day in a row for buying and selling at 86.00 and 86.20. The rupee dropped Rs 1.21 against euro for buying at Rs 122.20 and Rs 1.51 for selling at Rs 123.00.
On July 15, the rupee fell five paisa in relation to dollar for buying and selling at 86.05 and 86.25. The rupee, however, appreciated against the euro, gaining 74 paisa for buying at Rs 121.56 and picking up 94 paisa for selling at Rs 122.06.
On July 16, the rupee slipped five paisa in relation to dollar for buying and selling at 86.10 and 86.30. The rupee, however, gained slightly against euro, rising 12 paisa for buying at Rs 121.44 and at Rs 121.94.