The general trend of the rupee was mixed in the local market during 2003 as it registered modest gains versus US dollar, but it declined in value substantially in terms of euro which is at present the world's leading currency, fast rising in value against all world currencies, analysts said.
By the end of 2003, the rupee had lost nearly Rs 12 versus the euro in the kerb market for buying and selling at Rs 72.10 and Rs 72.40, respectively. It, however, performed well versus the dollar, gaining about a rupee during the period. It was quoted for buying and selling at Rs 57.35 and Rs 57.40 respectively against Rs 58.25 and 58.30 at the beginning of the year.
In the inter-bank market, the rupee gained about 50 paisa against dollar for buying and selling at Rs 57.38 and Rs 57.40 against Rs 57.79 and Rs 57.80 during the same period, experts said.
The feature of the year was the narrowing gap between inter-bank and kerb market rates, which sometimes showed no difference or of one or two paisa, dealers said.
According to some currency observers, it was not only the Pak rupee which declined sharply but most of the world currency units lost versus the single European unit due to its surge in the international markets.
The dollar started falling versus the major currencies in 2003 as the US-led forces attacked Iraq to restore democracy.
In the meantime, market players who were fed up with the weakness of the greenback after the 9/11 incident, were expecting that dollar would come back on its old track after the US attack on Iraq.
But, currency analysts said that these hopes faded as the euro kept ascending versus the dollar, whereas it was trading without any significant fluctuations versus the dollar before the US invasion on Iraq.
In fact, according to the foreign observers, the dollar has been under pressure following the uncertainties about the US economic outlook and outflows of funds.
Many experts said that the greenback may lose its lustre; as trade deficits of the US are not coming down, why the investors should suffer. So they preferred to diversify to the European and Asian currencies.
Another factor was the US economic managers' attitude towards dollar's trend versus currencies.
According to the US economic team, a falling dollar would have helped in lifting its exports.
In a bid to keep the yen lower versus the dollar, the Bank of Japan intervened in the markets several times, but they observed that the practice proved short-lived in recovering the dollar, analysts said.
The greenback persisted in its fall while the US monetary team was seemingly a little satisfied with the trend of the dollar.
Many analysts predicted that dollar would not show any major change in its trend in 2004 because of hovering concerns over the US current account and budget deficits.
According to market sources, a strong yen was hurting Japanese exporters by making its products less competitive price-wise abroad and reducing overseas earnings.
Commenting on euro's upward trend in the world markets, market players said that the single European currency consolidated versus the greenback and was trading in the range of 1.24-1.25 per dollar.
As a result, the euro got strength from the global trend and breached an important mark of Rs 72 versus euro in the kerb market, market men said.
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