The rupee moved little against dollar on the currency market during the week ended on July 9, 2011. On the interbank market, the rupee managed to retain its levels against dollar for buying and selling at 85.90 and 85.95.
In the open market, the rupee fell by 10 paisa versus dollar for buying and selling at 86.10 and 86.30 due to strong demand for dollars. The rupee, however, gained Rs 2.02 in relation to euro for buying and selling at Rs 122.38 and Rs 122.88.
In the order to keep a balance between demand and supply, availability of dollar is necessary. So, if remittances and foreign exchange reserves retain firm trend, the rupee may be able to show firmness versus dollar. According the State Bank of Pakistan (SBP), in the first week of the new fiscal year 2011-12, foreign exchange reserves improved by 777 million dollars to touch record high at 18.247 billion dollars due to inflows of 411 million dollars from the World Bank and the Asian Development Bank (ADB) for the uplift work in the country. The country may be able to get more loans from the International Monetary Fund (IMF) as the government has met one of the major conditions for reducing fiscal deficit by implementing tax reform. In the meantime, it is expected that the rupee may move both ways in terms of dollar in days to come.
INTER-BANK MARKET: On Monday, the rupee managed to retain weekend levels versus the dollar for buying and selling at 85.90 and 85.95.
On Tuesday, the rupee was unchanged versus dollar for buying and selling at 85.90 and 85.95.
On Wednesday, the rupee rose by 10 paisa in relation to dollar for buying and selling at 85.80 and 85.85.
On Thursday, the rupee moved both ways versus dollar as it shed two paisa for buying at 85.82 and gained one paisa for selling at 85.84.
On Friday, the rupee was unchanged against dollar for buying and selling at 85.82 and 85.84.
On Saturday, the rupee dropped eight paisa against dollar for buying at 85.90 and 11 paisa for selling 85.95.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the euro pared its gains against dollar and pulled back from a one-month high after Standard & Poor's said a debt rollover plan, being considered for Greece, may put the country into selective default.
The euro had hit a one-month high of $1.4580 earlier on Monday, buoyed by diminished worries over the risk that Greece may default in the short-term, with stop-loss buying adding to its rise.
The yuan hit a record high against dollar after People's Bank of China fixed a historically strong mid-point, but the market remained cautious about the pace of yuan appreciation.
Indian rupee was trading at Rs 44.57 versus dollar and Malaysian ringgit was available at 3.000.
Inter bank buy/sell rates for the taka against dollar were 74.25/74.29 (previous 74.20/74.24) and Call Money Rates 6.00-10.00 percent (previous 7.25-12.00 percent).
In the second Asian trade, euro looked set to snap a six-day winning streak, coming off nearly one-month highs against dollar, which was bought back broadly on a flurry of stop-loss buying and short-covering by macro-funds.
Some traders cited talk that US companies, such as Pfizer, could repatriate dollars earned overseas to take advantage of a proposed US tax break as helping to push euro below $1.4500.
Indian rupee was trading at Rs 44.43 versus dollar, Malaysian ringgit at 3.0055, and Chinese yuan was available at 6.4625.
In the third Asian trade, euro regained some ground as short-term players covered short positions ahead of a European Central Bank policy meeting, following a steep fall against the Swiss franc and the dollar after Moody's slashed Portugal's credit rating to junk.
The single currency was lifted by stop-loss buying as well as broad weakness in dollar, which fell prey to profit-taking after Tuesday's short squeeze with Asian central banks' selling it, while hedge funds liquidated their longs in dollar/yen.
Inter bank buy/sell rates for taka against dollar were 74.27/74.31 (previous 74.28/74.29) and Call Money Rates 7.50-12.00 percent (previous 6.00-10.00 percent). Indian rupee was trading at Rs 44.43 versus dollar, Malaysian ringgit was available at 3.0040 and Chinese yuan was at 6.4679.
In the fourth Asian trade, euro stabilised but remained vulnerable as worries about Europe's sovereign debt problems could take centre-stage again after a widely expected interest rate hike by the European Central Bank later in the day.
Concern that Greece's debt crisis would spread to other highly indebted peripheral euro zone countries flared up this week after Moody's slashed its rating for Portugal to junk status.
"Ireland could get downgraded to junk status, too, which would hurt the euro. Countries like Spain and Italy have relatively high ratings despite rises in their bond yields and they could face more downgrades," said Kimihiko Tomita, forex manager at State Street.
Yield spreads on Italian bonds over German bunds soared in recent weeks and many traders say euro's potential downside would look bigger if the ECB raised rates.
Inter bank buy/sell rates for the taka against dollar were 74.35/74.37 (previous 74.27/74.31) and Call Money Rates 8.50-12.00 percent (previous 7.50-12.00 percent).
Indian rupee was trading at Rs 44.48 versus dollar, Malaysian ringgit at 3.0070, and Chinese yuan was at 6.4680. In the final Asian trade, euro kept a tentative grip on overnight gains, cheered by the European Central Bank's pledge to provide Portuguese banks with liquidity. But trading was likely to be subdued ahead of the highly anticipated US jobs report.
Commodity currencies were among the best performers after upbeat US data showing a surge in private-sector hiring further helped boost risk appetite. This saw the New Zealand dollar hit a fresh 30-year high around $0.8344.
Indian rupee was available at Rs 44.43 versus dollar, Malaysian ringgit at 2.9955, and Chinese yuan was at 6.464.
At the week-end, US dollar fell against yen, Swiss franc and sterling as significantly weaker-than-expected US jobs data raised expectations that the Federal Reserve would leave interest rates low well into next year.
The US Treasury runs out of cash to pay its bills on August 2 unless the government is legally allowed to borrow more. With the United States long regarded as the most stable country with its currency used as the global reserve, even talk of a US debt default has sent shudders through international markets.
The dollar was likely to trend lower in the week ahead in the aftermath of an abysmal US jobs report on Friday and without clear signs of progress on the approaching US debt ceiling deadline. The rapidly approaching deadline overshadowed debt problems in the euro zone.
Friday's jobs report, showing only meagre growth in June payrolls, added to the gloom surrounding US dollar as investors saw the government and Federal Reserve as failing in efforts to stoke economic growth despite a huge stimulus program and rise in borrowings.
OPEN MARKET RATES: On July 4, the rupee maintained overnight level against greenback for buying and selling at 86.00 and 86.20. The rupee shed three paisa versus euro for buying and selling at Rs 124.43 and Rs 124.93.
On July 5, the rupee maintained overnight levels against US currency for buying and selling at 86.00 and 86.20. The rupee gained 36 paisa versus euro for buying and selling at Rs 124.07 and Rs 124.57.
On July 6, the rupee maintained the overnight levels against US currency for buying and selling at 86.00 and 86.20. The rupee gained 74 paisa versus euro for buying and selling at Rs 123.33 and Rs 123.83.
On July 7, the rupee maintained the overnight levels against US currency for buying and selling at 86.00 and 86.20, while it rose by 57 paisa in terms of euro, for buying and selling at Rs 122.76 and Rs 123.26.
On July 8, the market was closed due mourning day called by MQM after killing of several people.
On July 9, the rupee drifted lower by 10 paisa in relation to dollar for buying and selling at 86.10 and 86.30. The rupee, however, gained 38 paisa in terms of for buying and selling at Rs 122.38 and Rs 122.88.