THE RUPEE: bullish trend

Bulls dominated the money market during the week ended on June 11, 2011, as the rupee recovered its some lost ground in terms of both dollar and euro. On the interbank market, the rupee gained 21 paisa against dollar for buying at 85.74 and 23 paisa for selling at 85.77.
On the open market, the rupee appreciated by 40 paisa versus dollar for buying at 85.75 and 85.95, and recovered Rs 2.45 in relation to euro as the latter fell in the global market owing to different worries.
The rupee, at the last quarter of the outgoing fiscal year, tried to retain its levels versus dollar failed to do so on rising demand for the US currency.
Payment bills turned higher due to sharp rise in the oil and commodities prices. As a result, foreign exchange reserves came down to 17.16 billion dollars against previously reported 17.34 billion dollars.
During 10 months, the country's trade deficit had shown improvement but higher payment bills shed its performance just in May.
INTER-BANK MARKET: On Monday, the rupee gained three paisa versus dollar for buying and selling at 85.92 and 85.97.
On Tuesday, the rupee picked up two paisa versus dollar for buying and selling at 85.90 and 85.95.
On Wednesday, the rupee retained its overnight level against dollar for buying at 85.90 while it gained three paisa for selling at 85.92.
On Thursday, the rupee rose by 20 paisa versus dollar for buying at 85.70 and 18 paisa for selling at 85.74.
On Friday, the rupee picked up seven paisa versus dollar for buying and selling at 85.63 and 85.67 despite higher demand for the latter.
On Saturday, the rupee dropped 11 paisa in terms of dollar for buying at 85.74 and 10 paisa for selling at 85.77.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian session, the euro hovered near a one-month high, bolstered by news that Greece may receive a vital slice of aid in July to avoid a default, and some traders said that a widening gap between US and euro-zone interest rates could push the euro up to $1.50 in coming weeks.
The single currency jumped almost 4 percent in the past three weeks on hopes that Greece is close to securing billions of euros in aid. A new aid package may cost more than 100 billion euros ($144 billion), German news magazine Der Spiegel said in its latest issue of Monday.
Inter bank buy/sell rates for taka against dollar was 73.75/73.85 (previous 73.59/73.73), and Call Money Rates 6.00-9.00 percent (previous 6.00-9.50 percent).
Indian rupee was trading at Rs 44.80 versus dollar, Malaysian ringgit at 2.9995, and Chinese yuan was at 6.4796.
In the second Asian session, the euro slipped from Monday's one-month peak following comments from Eurogroup chairman Jean-Claude Juncker that the common currency was overvalued. Others cited remarks from a spokesman for the German finance ministry that a second aid programme for Greece was not certain as weighing on the currency.
The yuan ended down slightly against dollar, even though the People's Bank of China set the mid-point at a new peak, with dealers reporting large dollar demand from corporate clients. The yuan fluctuated in a small range of 6.4778 to 6.4900, just shy of its record high of 6.4777 hit last Wednesday, as the market was cautious over uncertainties in the global economy, but dealers said that yuan's strong long-term outlook was still intact.
Indian rupee was at Rs 44.75 versus dollar and Malaysian ringgit was at 3.0110.
In the third Asian trade, dollar slipped to a one-month low under 80 yen as the yen was bought back broadly amid heightened risk-aversion reflecting general falls in Asian share prices.
The US currency was also weighed down due to comments by Federal Reserve Chairman Ben Bernanke that bolstered expectations for US interest rates to stay low for now.
Bernanke gave a sombre assessment of the US economy, acknowledging that growth has slowed, but offered no hint of providing more stimulus to accelerate growth.
The yuan hit a record high versus dollar as the People's Bank of China fixed another all-time high mid-point, and a top government official reiterated that imported inflation remained strong.
Inter bank buy/sell rates for taka against dollar were 73.79/73.88 (previous 73.77/73.87) and Call Money Rates 6.50-9.00 percent (previous 6.00-10.00 percent). Indian rupee was trading at Rs 44.67 in relation to dollar and Malaysian ringgit was at 3.0115.
In the fourth Asian trade, euro recouped some of its losses from previous day ahead of a European Central Bank policy meeting later at which the ECB was expected to lay the groundwork for a rate hike in July, with any hints on tightening possibly driving the currency through key resistance. The central bank is seen as likely to use higher staff inflation forecasts, due at Thursday's post-policy meeting news conference, to justify a case for tightening in July.
While traders said the view that the ECB was likely to signal rising rates had already been priced in to the euro's advance to some extent, the move could still push the currency above resistance at $1.4700, which it failed to breach on Wednesday.
"The euro has been pressured by concerns over euro zone debt; so I think it would still have enough momentum to go above $1.4700 if the ECB suggests a rate hike," said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ.
The yuan closed two pips lower versus dollar, consolidating its gains, as the People's Bank of China fixed the mid-point a shade weaker after letting it hit a slew of record highs recently.
Interbank buy/sell rates for taka against dollar were 73.82/73.90 (previous 73.77/73.87) and Call Money Rates 6.25-12.00 percent (previous 6.00-12.00 percent).
Indian rupee was trading at Rs 44.70 versus dollar and Malalysian ringgit was at 3.0145.
In final Asian trade, the euro struggled to regain its footing although it held above one-week lows as worries about the euro-zone's debt problems overwhelmed any support from a likely interest rate rise by the European Central Bank next month.
Market participants shifted their focus back to debt problems in Greece and other euro-zone countries, using that as an excuse to unwind long euro positions, built up over past three weeks, when the currency climbed back from a two-month low below $1.4000 hit on May 23.
ECB President Jean-Claude Trichet signalled that the benchmark refinancing rate, now at 1.25 percent, would rise next month. But markets expected as much and had already priced in the prospect of a July rate hike.
The yuan closed down slightly versus dollar, consolidating its recent gains, as the People's Bank of China fixed the mid-point a shade weaker for the second day after letting it hit a slew of record highs recently.
Indian rupee was trading at Rs 44.73 in relation to dollar and Malaysian ringgit was at 3.0150.
At the week-end, euro fell for a third straight day, with more losses viewed as likely in the upcoming week, weighed down by wranglings about how to handle Greece's debt crisis and diminished expectations about euro zone rate hikes.
The uncertainty should continue next week, analysts said, with a consensus agreement unlikely to be reached next week before a June 20 euro zone finance ministers' meeting to discuss ways to secure more funding for Greece. That was a precondition for disbursement of the next tranche of its current bailout in July.
"Tension in the European periphery is again rising and has potential to feed into a higher risk premium on the euro in coming weeks, as we enter a critical phase around securing a more long-term solution for Greece," said Jens Nordvig, head of G10 FX research at Nomura Securities in New York.
OPEN MARKET RATES: On June 6, the rupee picked up 15 paisa in relation to dollar for buying and selling at 86.00 and 86.20. The rupee gained two paisa in terms of euro for buying and selling at Rs 125.19 and Rs 125.69.
On June 7, the rupee gained 10 paisa in relation to dollar for buying and selling at 85.90 and 86.10. However, it lost 54 paisa in terms of euro for buying and selling at Rs 125.73 and Rs 126.23.
On June 8, the rupee held the overnight levels in terms of dollar for buying and selling at 85.90 and 86.10, while it gained 12 paisa against euro for buying and selling at Rs 125.61 and Rs 126.11.
On June 9, the rupee picked up 10 paisa in relation to dollar for buying and selling at 85.80 and 86.00, and appreciated by 67 paisa against euro for buying at Rs 124.94 and Rs 125.44.
On June 10, the rupee gained 15 paisa in relation to dollar for buying and selling at 85.65 and 85.85, and it also gained Rs 1.35 against euro for buying at Rs 123.59 and Rs 124.09.
On June 11, the rupee shed 10 paisa against dollar for buying and selling at 85.75 and 85.95. The rupee, however, gained 83 paisa versus euro for buying at Rs 122.76 and Rs 123.26.