THE RUPEE: dollar higher on strong demand

The dollar, on the back of rising demand, retained commanding position versus rupee during the week ended on August 27, 2011. IN INTER-BANK MARKET DEALS: The rupee fell by 18 paisa in relation to dollar for buying at 87.13 and by 17 paisa for selling at 87.15.
ON OPEN MARKET: The rupee lost 15 paisa against dollar for buying and selling at 86.70 and 86.90. The rupee also lost Rs 1.19 versus euro for buying and selling at Rs 125.48 and Rs 125.98.
There were demands for dollars to clear payments and it is expected that the rupee would continue fall versus greenback for the said reason, but rising trend in remittances may help it to resist sharp fall.
Money market expert Malik Bostan said that investors were not buying dollars from open market for investment purpose. So dollar is short than demand and the rupee is still trading within 86.90. He said that the concept of investment in dollars is near to end after the economic crisis in the US and European countries.
Other currency analysts said that foreign investors are drawing back their investments due to law and order situation in the country, which is increasing the value of dollar. They are investing in gold, purchasing as a safe haven.
Traditionally, the rupee comes under pressure every year due to payment requirements and dollar buying by pilgrims, but this time situation is totally different owing to disappointing picture of economic condition the world over, they said. They expect the currency to remain under pressure, as dollar payments are higher in July and August because of stronger oil demand and debt payments.
However, higher remittances by overseas Pakistanis may support the rupee. According to official data, remittances rose 38.57 percent to 1.1 billion dollars in the first month of 2011/12 fiscal year, compared with 791.18 million dollars in the same period last year.
According to the State Bank of Pakistan (SBP), the foreign exchange reserves fell to 17.96 billion dollars in the week ending August 20, from 18.04 billion dollars the previous week, due to scheduled debt repayments.
INTER-BANK MARKET: On Monday, the rupee lost 10 paisa in relation to dollar for buying and selling at 87.05 and 87.08.
On Tuesday, the rupee recovered 14 paisa versus dollar for buying at 86.91 and 12 paisa for selling at 86.96.
On Wednesday, the rupee recovered 14 paisa in relation to dollar for buying at 86.77 and 15 paisa for selling at 86.81.
On Thursday, the rupee showed no change in relation to the dollar for buying at 86.77 while shed two paisa for selling at 86.83.
On Friday, the rupee lost 13 paisa against dollar for buying at 86.90 and 12 paisa for selling at 86.95.
On Saturday, the rupee shed23 paisa against dollar for buying at 87.13 and 20 paisa for selling at 87.16 owing to higher demand for dollars.
OVERSEAS MARKET OUTLOOK FOR DOLLAR: In Asia's week-opening session, the dollar gained against yen, rising from a record low plumbed previous week, as investors covered dollar short positions wary that Tokyo could step into the market and with a US bank detected buying.
Underscoring extreme nervousness in the market, the dollar briefly spiked to 1-1/2 week high of 77.23, but quickly pared some of those gains, with traders citing talk that the jump was triggered by bids from a US bank.
"The market is waiting and hoping for intervention. The dollar has been bought back since very early in the morning on short-covering after sharp losses," said Teppei Ino, a currency analyst at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
The dollar was trading at Rs 45.75 versus Indian rupee, at 2.9750 in terms of Malaysian ringgit and at 6.3952 in relation to Chinese yuan.
In second Asian trade, euro edged higher but could come under pressure if euro zone manufacturing data point to more downside risk in a market already fretting about a global recession.
Australian dollar clawed higher after a gauge of Chinese manufacturing was not as weak as some had feared, and was last up 0.6 percent on the day at $1.0460.
HSBC's China flash Purchasing Managers' Index showed Chinese factory sector may have slowed slightly in August for a second straight month. The reading, however, still edged up to 49.8 in August, better than July's final reading. There had been vague market rumours earlier that the China flash PMI might turn out to be much weaker.
Dollar was available against Indian rupee at Rs 45.66, at 2.9725 versus Malaysian ringgit and at 6.3954 in terms of Chinese yuan.
In third Asian trade, yen came under a bit of pressure after Moody's cut its rating for Japan's government debt, but commodity currencies held firm having gained after manufacturing data in China and Europe were less grim than feared.
Moody's downgraded Japan by a notch to Aa3, blaming large budget deficits and the build-up of debt since the 2009 global recession. Still, such cuts had scant effect on yields as the vast bulk of Japanese debt is owned by the Japanese themselves.
Dollar was available against Indian rupee at Rs 45.62, at 2.9690 versus Malaysian ringgit, and at 6.3884 in terms of Chinese yuan.
Inter bank buy/sell rates for taka against dollar on Wednesday were 73.45/73.85 (previous 73.90/74.12), and Call Money Rates 12.00-18.00 percent (previous 8.00-15.00 percent.
In fourth Asian trade, dollar was firm against major currencies and could eke out further gains after a short-covering rally the day before, as investors fretted that US Federal Reserve may not signal new stimulus for the economy this week.
While players were worried that the US economy might slip into recession, they were not convinced that Fed Chairman Ben Bernanke was ready to signal another bond-buying programme when he would address a central bank conference on Friday in Jackson Hole, Wyoming.
Dollar was available against Indian rupee at Rs 45.99, at 2.9830 versus Malaysian ringgit, and at 6.391 against Chinese yuan.
In final Asian trade, dollar came off a two-week high against yen, weighed down by euro's gains on political progress in Spain, but was seen likely to recoup losses and firm further on views the Federal Reserve will not signal strong economic stimulus.
The greenback was also under pressure from Australian dollar which gained on Australian central bank chief's upbeat remarks about the country's economy, soothing worries over deep interest rate cuts.
Markets started the week thinking Bernanke might announce a third round of asset purchases or some other extraordinary policy later on Friday in a speech in Jackson Hole, Wyoming, pressuring dollar. But this view changed, giving US currency a broad boost on Thursday.
The US currency was at Rs 46.04 versus Indian rupee, at 2.9880 in relation to Malaysian ringgit, and at 6.390 versus Chinese yuan.
At week-end, dollar fell against euro and yen after Federal Reserve Chairman Ben Bernanke said the central bank could do more to boost growth, but stopped short of detailing further action.
Swiss franc tumbled to one-month lows versus both dollar and euro after Swiss bank UBS said it might charge fees on some franc deposits.
Bernanke, speaking in Jackson Hole, Wyoming, said the Fed had marked down its outlook for US growth and it would extend its September meeting to two days from one to consider its options. However, he said the onus for boosting long-term growth prospects lay at the feet of the White House and the US Congress.
OPEN MARKET RATES: On August 22, the rupee gained five paisa versus dollar for buying and selling at 86.50 and 86.70. The rupee also shed 5 paisa in terms of euro for buying and selling at Rs 124.34 and Rs 124.84.
On August 23, rupee retained overnight level versus dollar for buying and selling at 86.50 and 86.70. The rupee lost 56 paisa in relation to euro for buying and selling at Rs 124.90 and Rs 125.40.
On August 24, the rupee lost 10 paisa versus dollar for buying and selling at 86.60 and 86.80. The rupee, however, gained 16 paisa in relation to euro for buying and selling at Rs 124.74 and Rs 125.24.
On August 25, the rupee recovered 10 paisa versus dollar for buying and selling at 86.50 and 86.70. The rupee, however, lost 16 paisa in relation to euro for buying and selling at Rs 124.90 and Rs 125.40.
On August 26, the rupee was down by 10 paisa versus dollar for buying and selling at 86.60 and 86.80. The rupee also dropped 3 paisa in terms of euro for buying and selling at Rs 124.93 and Rs 125.43.
On August 27, the rupee slipped 10 paisa versus dollar for buying and selling at 86.70 and 86.90. The rupee dropped 5 paisa in terms of euro for buying and selling at Rs 125.48 and Rs 125.98.