THE RUPEE: all-round gains

The rupee crossed the barrier of 84 versus dollar on the money market during the week, ended on April 16, 2011, on high inflow of remittances. On interbank market, the rupee gained 64 paisa in terms of dollar for buying and selling at 84.33 and 84.38 respectively.
On the open market, the rupee gained 45 paisa versus greenback for buying at 84.40 and 35 paisa for selling at 84.60. The rupee roase by Rs 1.31 in terms of euro for buying and selling at Rs 120.99 and Rs 121.49 as the single European currency fell versus major currencies.
As a whole, the rupee managed to recover lost ground versus dollar due to healthier trend in the home remittances. In addition, strong foreign exchange reserves and healthier export proceeds also helped the rupee to look ahead.
However, it seems most likely that the rupee may not be able to retain its gains owing to strong dollar buying to clear the payments in the near-term. But it is likely to recover it value because of positive leads.
According to the State Bank of Pakistan (SBP), the country's foreign exchange reserves eased to 17.31 billion dollars in the week ending on April 9, from 17.64 billion dollars the previous week.
It was noted that despite the inflows of remittances, the net foreign investment fell 0.3 percent to 1.318 billion dollars in the first three quarters of the current fiscal year 2010-11, mainly because of decrease in foreign direct investment (FDI), the central bank said. Foreign investment totalled 1.321 billion dollars in the same period last year.
Foreign direct investment fell 28 percent in the July-March period to 1.08 billion dollars from 1.50 billion dollars in the same period last year, the SBP said.
INTER-BANK MARKET RATES: On Monday, the rupee gained 24 paisa versus dollar for buying and selling at 84.73 and 84.78. On Tuesday, the rupee gained 25 paisa versus dollar for buying at 84.48 and 26 paisa for selling at 84.52.
On Wednesday, the rupee rose by 10 paisa in relation to dollar for buying and selling at 84.38 and 84.42.
On Thursday, the rupee gained of 13 paisa in relation to dollar for buying at 84.25 and 12 paisa for selling at 84.30.
On Friday, the rupee picked up five paisa for buying and selling versus dollar at 84.20 and 84.25.
On Saturday, the rupee dropped by 13 paisa in relation to the dollar for buying and selling at 84.33 and 84.38.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the yen fell to an 11-month low against the euro and a 2-1/2 year trough versus the Australian dollar, and looked set to weaken further as investors piled into carry trades in favour of higher yielding assets.
The US dollar dipped back in the direction of previous week's 16-month low against a basket of major currencies, hurt by positive signs for investor risk-taking, and also extended its recent losses against some Asian currencies.
While some technical gauges suggested that rallies in euro and Australian dollar against yen could pause in near-term, traders said the broader trend of yen weakness was likely to remain intact.
In the second Asian trade, the yen rose sharply and was the biggest gainer among major currencies over past 24 hours as profit-taking on bets against it gathered momentum after Japanese authorities upgraded the nuclear crisis to a par with Chernobyl and several strong aftershocks hit Japan.
Declines in oil prices also prompted investors to exit positions in commodity-linked currencies.
The US dollar, like yen, found some reprieve as speculators locked in profits from positions taken against the low-yielding currency in favour of the euro and red-hot commodity plays such as Australian dollar.
Indian rupee was trading at Rs 44.39 versus US dollar; Malaysian ringgit at 3.0250; and Chinese yuan was trading at 6.5442.
In the third Asian trade, the yen slipped as a bout of global risk reduction abated, with some market players looking for fresh opportunities to put on bets against the yen after having booked profits the previous day.
The yen fell against dollar and dipped broadly on the crosses, giving back some of the gains it made on Tuesday, when it rallied broadly as short-covering gained steam.
Traders said a sell-of f in global equities and commodities coupled with an upgrade of the severity of Japan's nuclear crisis had prompted investors to unwind some of the recent one-way yen-funded carry trades, with extended positioning having helped exacerbate the move.
Indian rupee was at Rs 44.39 in terms of US currency; Malaysian ringgit at 3.0280; and Chinese yuan was available at 6.5359.
In the fourth Asian trade, the dollar hit a fresh 16-month low against a basket of currencies as expectations grew that Federal Reserve would keep its loose monetary policy, widening interest rate differentials in favour of higher yielding currencies.
In flow-driven trading, the dollar briefly broke below its 200-day moving average near 83.43 yen after investors lightened sizeable long positions established after the US currency's speedy ascent from its record low of 76.25 in March.
The tone for the dollar remained weak after Wednesday's US retail sales data and the Fed's Beige Book report did nothing to change the view the central bank would keep its $600 billion asset buying programme until June.
The yuan hit a fresh trading peak against US dollar, testing a level stronger than 6.53 for the first time, after the People's Bank of China fixed another record high yuan mid-point as the government uses the currency to help fight imported inflation.
Indian rupee was trading at Rs 44.50 versus US dollar and Malaysian ringgit was at 3.0260. In final session of Asian trade, the euro dipped but stayed within sight of a 15-month peak against US dollar, with further losses expected to be limited given the diverging outlook for monetary policy in the euro zone and the United States.
Not helping dollar, several top Federal Reserve officials sounded relaxed about inflation despite the recent surge in oil prices, adding to expectations that the Fed would not cut short its $600 billion debt-buying programme.
The euro, in contrast, remained supported by the prospect of higher interest rates in the euro zone despite comments by Germany that Greece may need to restructure its debt.
The yuan ended slightly lower against dollar after hitting another record intraday high, with the People's Bank of China fixing the mid-point at an all-time peak amid intensifying inflationary pressures.
China's turbo-charged growth eased just a touch in the first quarter, while consumer price inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel, data showed.
Indian rupee was trading at Rs 44.50 versus the dollar and Malaysian ringgit was available at 3.0185 in terms of US currency.
In the final session, the dollar pared gains against the euro after data showed US consumer sentiment improved in April. The euro rose to 1.4420 dollars, from $1.4405 dollar, still down 0.5 percent on the day. The dollar fell to 83.10 yen from 83.13 before the release of the report, down 0.5 percent from the prior close.
The Reuters/University of Michigan preliminary April consumer sentiment survey posted at 69.6, compared with the 68.5 expected and the reported 67.5 in March.
OPEN MARKET RATES: On April 11, the rupee showed no change for buying at 84.85 and for selling at 85.00. The rupee recovered 30 paisa gain in relation to the euro for buying and selling at Rs 122.00 and Rs 122.50.
On April 12, the rupee rose by 25 paisa for buying at 84.60 versus dollar and picked up 30 paisa for selling at 84.70. The rupee also rose by 75 paisa in terms of the euro for buying and selling at Rs 121.25 and Rs 121.75.
On April 13, the rupee picked up 10 paisa versus dollar for buying at 84.50 and 5 paisa for selling at 84.65. The rupee, however, lost 65 paisa in terms of euro for buying and selling at Rs 121.81 and Rs 122.31.
On April 14, the rupee also appreciated versus dollar, picking up 35 paisa for buying and selling at 84.15 and 84.30.
Interestingly, the rupee shed its weakness versus the euro, gaining 49 paisa for buying and selling at Rs 121.32 and Rs 121.82.
On April 15, the rupee, however, lost 15 paisa for buying at 84.30 against dollar and 20 paisa for selling at 84.50, while it maintained its overnight levels versus the euro for buying and selling at Rs 121.32 and Rs 121.82.
On April 16, the rupee shed 10 paisa versus dollar for buying and selling at 84.40 and 84.60, while it rose by 33 paisa versus euro for buying and selling at Rs 120.99 and Rs 121.49.