Bears dominated the money market, as the rupee fell slightly versus the dollar during the week, ended on March 13, 2011. On the inter-bank market, rupee shed five-paisa in relation to the dollar for buying and selling at Rs85.45 and Rs85.50.
On the open market, the rupee adopted the same patter in terms of the dollar, losing 10 paisa for buying and selling at Rs85.40 and Rs85.55. The rupee, however, lost 73-paisa in relation to the euro for buying and selling at Rs 118.17 and Rs 118.67.
On the back of rising trend in remittance, the rupee managed to trim its losses versus the US currency. In the meantime, the foreign exchange reserves fell to 17.37 billion dollars.
The rupee struggled to hold its firmness versus the dollar. But it appeared that the rupee may not maintain its present level in the near future due to strong demand of dollars.
In the middle of the week, the rupee rose versus the dollar on the back of bullish trend in remittances, which is also helping country's foreign exchange reserves. In addition, it looks that rupee's surge may proved short lived in the absence positive trend in the basic fundamentals.
INTER-BANK MARKET RATES: On Monday, the rupee improved after gaining five-paisa against the dollar for buying and selling at Rs85.35 and Rs85.40.
On Tuesday, the rupee gained 31-paisa for buying at Rs85.04 and it also picked up 32-paisa for selling at Rs85.08 due to easy supply of the US currency.
On Wednesday, the rupee lost 14-paisa in relation to the dollar for buying and selling at Rs85.18 and Rs85.22. On Thursday, the rupee lost 19 paisa in relation to the dollar for buying at Rs85.37 and it fell by 20-paisa for selling at Rs85.42.
On Friday, the rupee gained nine-paisa in relation to the dollar for buying at Rs85.28 and it also picked up 10-paisa for selling at Rs85.32. On Saturday, the rupee drifted lower in relation to the US currency, falling 17-paisa for buying at Rs85.45 and it lost 18 paisa for selling at Rs85.50.
OVERSEAS OUTLOOK FOR DOLLARS: In the first Asian trade, the dollar remained stuck near a four-month low against a basket of major currencies on Monday, while the euro was supported by expectations that the European Central Bank to raise interest rates, as early as April.
The dollar struggled to gain ground after US jobs data last week came in a touch better than expected, but disappointed investors who had been bracing for an even stronger report.
"The market was prepared for a mammoth home run and an arms-raised victory lap. What it got was some good solid contact that resulted in a single base hit. Still good, but a bit disappointing given the pre-payrolls hype," said David Watt, strategist at RBC Dominion Securities.
Inter-bank buy/sell rates for the taka against the dollar on Monday. 71.50/71.50 (previous 71.50/71.50) Call Money Rates: 11.00-12.00 percent (previous 11.00-12.00 percent).
Indian rupee was available at Rs 44.98 versus the dollar, Malaysian ringgit was trading at 3.0285 in terms of the greenback and Chinese yuan was at 6.5650 in relation to the US currency.
In the second Asian trade, the euro struggled to make headway after its rally stalled just above $1.40 overnight, helping an oversold dollar to edge off four-month lows against a basket of major currencies.
Analysts said the near-term outlook for the common currency, which has gained some 4 percent against the dollar since mid-February, hinges on a summit of European Union leaders on Friday as euro zone countries work on measures they hope that will resolve the region's debt crisis. Indian rupee was trading at Rs 45.05 versus the dollar, Malaysian ringgit was available at 3.0320 in relation to the US currency and Chinese yuan was at 6.5671 in terms of the greenback. In the third session, the dollar rose against the euro on fear some euro zone states won't be able to withstand higher interest rates, though further gains will likely require the Federal Reserve to hint at tighter policy.
Tough inflation talk from European Central Bank President Jean-Claude Trichet last week pushed the euro above $1.40 on expectations of an increase in euro zone interest rates by as early as next month.
Recent credit downgrades for Greece and Spain reminded investors' higher borrowing costs and a stronger currency would make it more difficult for debt-burdened countries to boost growth.
"The problem with the interest rate driven trade and Trichet's hawkish comments is that you have to see the other issues behind it," said John McCarthy, director of foreign exchange at ING Capital Markets in New York. "Higher rates will be devastating on the peripheral countries."
Indian rupee was trading at Rs 45.08 versus the dollar, Malaysian ringgit was available at 3.0310 in terms of the greenback and Chinese yuan was at 6.5700 in relation to the US currency.
In the fourth Asian trade, the euro edged lower against the US dollar, with further pullbacks seen likely, as worries about how Europe will address its fiscal problems offset expectations of an upcoming rate hike by the European Central Bank.
Technical strategists said the euro's consolidation from Monday's four-month peak at $1.4036 is still in progress and a deeper retreat cannot be ruled out. However, strong support is expected from the near-term rising trend line, around $1.3810, which should contain the euro's fall.
Indian rupee was trading at Rs 45.00 versus the dollar, Malaysian ringgit was available at 3.0325 and Chinese yuan was at 6.5704 in terms of the greenback.
In the final session of Asia trade, the yen fell broadly and slumped to a two-week low against the dollar after a major earthquake struck Japan and triggered a slide in Japanese shares.
The dollar climbed to as high as around 83.29 yen, the dollar's highest since February 22, rising from around 82.80 yen on news of the quake, which the US Geological Survey said was measured at magnitude 8.9.
Tokyo shares extended their losses, and JGB futures surged after the earthquake. The dollar last stood at 83.15 yen up 0.2 percent from late US trade on Thursday. The euro climbed 0.4 percent against the yen to 114.84 yen.
The euro rose 0.1 percent against the dollar to $1.3815, stabilising after steep falls in the previous session but it remained vulnerable to a sell-off if a euro zone summit later in the day fails to ease concerns about sovereign debt.
Indian rupee was trading at Rs 45.18 versus the dollar, Malaysian ringgit was available at 3.0355 in relation to the dollar and Chinese yuan was at 6.5731 in terms of the greenback.
At the weekend, the yen soared after the worst earthquake on record to hit Japan spurred a safety bid, and it could rise further next week if insurers scramble to raise cash by selling their foreign assets.
The yen initially fell to a two-week low against the dollar but then shot higher as the full extent of the devastation became clear. The quake triggered a ferocious tsunami, killing at least 1,000 people.
Worries about the impact on a fragile Japanese economy prompted investors to cut exposure to risk, traders said, with Japanese investors who had used cheaply borrowed yen to invest abroad bringing the money back home.
The dollar fell 1.2 percent to 81.87 yen, its biggest one-day decline since December 3, while the yen also rallied against the euro, pound and Swiss franc.
OPEN MARKET RATES: On March seven, the rupee managed to gain five paisa versus the dollar for buying and selling at Rs85.35 and Rs85.50. The rupee, however, drifted lower against the euro, losing 14-paisa for buying and selling at Rs 119.04 and Rs 119.54.
On March eight, the rupee rose steeply in relation to the dollar for buying and selling at Rs85.15 and Rs85.30. The rupee also gained against the euro, rising 78-paisa for buying and selling at Rs 118.26 and Rs 118.76.
On March nine, the rupee, however, gained 15 in terms of the dollar for buying at 85.00 while it picked up 10 for selling at 85.20.
After the decline in the value of the euro for the third day, the rupee managed to rise versus the single European currency, gaining 91-paisa for buying and selling at Rs 117.35 and Rs 117.85.
On March 10, the rupee followed the same pattern against the dollar in the open market, losing 25-paisa for buying and selling at Rs85.25 and Rs85.45. The rupee also fell versus the euro, dropping 66-paisa for buying and selling at Rs 118.01 and Rs 118.51.
On March 11, the rupee rose by five-paisa against the dollar for buying and selling at Rs85.20 and Rs85.40. The rupee maintained its surge in terms of the euro, rising Rs 1.02 for buying and selling at Rs 116.99 and Rs 117.49.
On March 12, the rupee could not maintain its firmness against the dollar, losing 10-paisa for buying at Rs85.30 and it also shed five-paisa for selling at Rs85.45. The rupee followed the same path versus the euro, shedding Rs 1.18 for buying and selling at Rs 118.17 and Rs 118.67.