The dollar remained in search of new destinations after hitting the mark of Rs 90 in the currency market during the week ended on December 17, 2011. In the interbank dealings, the rupee lost 50 paisa in relation to dollar to end at 89.55 and 89.60 for buying and selling, respectively.
On the open market, the rupee shed 70 paisa in terms of the greenback for buying and selling at 89.70 and 90.00, respectively. The rupee, however, gained Rs 2.15 versus euro for buying and selling at Rs 116.45 and Rs 116.95.
The feature of the week was that dollar hit the new high in the open market at Rs 90 and it was very close to this level in the interbank market. In fact, gas load shedding for four days for industries propelled the importers to rush buying of dollars. This factor of gas supply closure caused increase in oil imports. So, importers were trying to grab as much dollars as they could to meet payment requirements in future.
Malik Bostan, currency analyst, was of the view that there were several factors behind the increase in the demand for dollars. One major reason was lack of foreign investment in the country. "It is very necessary for the government to solve the basic problems at the grass-roots level because gas and power shortages are causing loss of huge foreign exchange," he said. A significant increase was seen in the forward buying of dollars following US announcement to stop aid of 700 million dollars to Pakistan and another pressure was built up by the expected next payment to the International Monetary Fund (IMF), which might cause more fall in the foreign exchange reserves, he added.
INTER-BANK MARKET DEALINGS: On Monday, the rupee lost six paisa against dollar for buying and selling at 89.11 and 89.16.
On Tuesday, the rupee shed 2 paisa versus dollar for buying at 89.13 while it inched up with a gain of one paisa for selling at 89.15.
On Wednesday, the rupee lost 46 paisa against dollar for buying at 89.59 and 48 paisa for selling at 89.63. On Thursday, the rupee lost one paisa against dollar for buying at 89.60 and by 2 paisa for selling at 89.65.
On Friday, the rupee picked up five paisa in relation to dollar for buying and selling at 89.55 and 89.60.
OPEN MARKET RATES: On December 12, the rupee retained its overnight level in relation to dollar for buying at 89.00 while it shed 10 paisa for selling at 89.30. The rupee gained 53 paisa versus euro for buying and selling at Rs 117.97 and Rs 118.47.
On December 13, the rupee retained its overnight levels in relation to dollar for buying and selling at 89.00 and 89.30. The rupee gained Rs 1.23 in terms of euro for buying and selling at Rs 116.74 and Rs 117.24.
On December 14, the rupee shed 10 paisa in relation to dollar for buying at 86.10 while it retained its overnight level for selling at 89.30. The rupee gained 97 paisa against euro for buying and selling at Rs 115.77 and Rs 116.27.
On December 15, the rupee lost 60 paisa in relation to dollar for buying and selling at 86.70 and 89.90. The rupee also lost 45 paisa in terms of euro for buying and selling at Rs 116.23 and Rs 116.73.
On December 16, the rupee recovered 10 paisa in relation to dollar for buying and selling at 86.60 and 89.80. The rupee, however, dropped 23 paisa in terms of euro for buying and selling at Rs 116.46 and Rs 116.96.
On December 17, the rupee shed 10 paisa in relation to dollar for buying and selling at 86.70 and 90.00. The rupee was almost unchanged in terms of euro for buying and selling at Rs 116.45 and Rs 116.95.
INTERNATIONAL OUTLOOK FOR DOLLAR: Reuters said: In the first Asian trade, the euro slipped and was expected to struggle going into the year-end after the European Union agreed on deeper economic integration but fell short of a convincing plan to deal a decisive blow to the region's debt woes. It fell to a session low of $1.3334 after Moody's ratings agency said the two-year-old crisis was still in a "critical" and "volatile" stage, adding that the region was prone to further shocks, and faced rising threats to cohesion.
Dollar was trading at Rs 52.40 in terms of Indian rupee, versus Malaysian ringgit at 3.1520, and at 6.360 in relation to Chinese yuan.
In the second Asian trade, euro plumbed two-month lows while Australian dollar sank closer to parity as rising disappointment over the European Union's summit prompted investors to position for possible downgrades of euro zone sovereign credit ratings.
Rating agencies warned that the previous week's EU summit, viewed by some as a last chance to save euro, did not go far enough in easing immediate concerns about the region's debt markets.
The euro fell as low as $1.3160, but climbed as far as $1.3206 in the Asian afternoon on short-covering before steadying at $1.3192. Inter bank buy/sell rates for taka against dollar on Tuesday were 79.95-80.30 (previous 79.79-79.80) and Call Money Rates 20.00 percent (previous 12.00-20.00 percent).
The yuan ended down against dollar, hitting the lower end of its trading band for the 10th straight day as investors warily eyed a slower pace of rises in the Chinese currency amid a slowdown in the local and global economy.
Dollar was trading against Indian rupee at Rs 53.44, and at 3.1810 versus Malaysian ringgit.
In the third Asian trade, euro wallowed near 11-month lows against dollar and crept close to an option barrier whose break could rapidly speed up its decline, with an Italian bond sale coming into focus later in the day.
After the Federal Reserve refrained, as expected, from boosting its easing programme at a meeting on Tuesday, euro bears felt free to end weeks of deadlock and pummelled the currency to as low as $1.3009, a level not seen since mid-January.
The yuan closed down slightly against dollar on Wednesday, hovering near its limit-down level from the mid-point fixed by the People's Bank of China, but it still rose slightly so far this month, buoyed by a slew of strong PBOC fixings.
Inter bank buy/sell rates for taka against dollar were 80.29-80.40 (previous 79.95-80.30), and Call Money Rates 20.00 percent (previous 12.00-22.00 percent). Dollar was trading verus Indian rupee at Rs 53.64, and at 3.1845 versus Malaysian ringgit.
In the fourth Asian trade, euro held steady, but still hovered near an 11-month low, hit the previous day, as signs the European debt crisis was far from over prompted investors to sell risky assets and bolstered demand for the dollar.
Euro was little changed at $1.2986 after having fallen to as low as $1.2945 on Wednesday, the lowest level since January 11, on trading platform EBS. The next major support is found at the year's low, $1.2860 on January 10.
Interbank buy/sell rates for taka against dollar on Thursday were 80.45-80.60 (previous 80.29-80.40) and Call Money Rates: 20.00 percent (previous 9.90-20.00 percent).
Yuan closed near its limit down level against dollar from the central bank's mid-point on Thursday but remained marginally up so far this month as the government showed its determination to dampen speculation of yuan depreciation.
Dollar was trading at Rs 54.24 versus Indian rupee, and at 3.1950 in terms of Malaysian ringgit.
In the final Asian trade, euro was poised to end its worst week in over a month on an upbeat note, taking heart from light short-covering in most riskier assets on Friday on the back of a well-bid Spanish bond sale and solid US economic data. But the mood remained brittle with possible cuts in the credit ratings of euro zone countries looming after a key EU summit previous week offered little respite to turbulent euro zone bond markets and cash-starved European banks.
Dollar versus Indian rupee earlier slumped more than 2 percent and was on track to post its biggest single-day slide in more than two years. The pair also broke through the 61.8 percent Fibonacci retracement at 52.38 of its earlier rises this month as interbank speculators sold it. But dollar/rupee recovered some of the slide as investors doubted the long-term effectiveness of the central bank's measures as Indian assets stayed unattractive, given the country's worsening economic outlook.
The yuan jumped to a record high on Friday against dollar on suspected intervention orchestrated by the central bank, its most explicit action in three months to deter speculators from betting on a fall in the currency.
Even the safest euro zone banks could start queuing up at the European Central Bank for cash in the next few months as their massive exposure to government debt freezes them out of money markets.
The pressure pushing banks' short-term funding costs higher could escalate quickly if the value of their sovereign debt holdings, which had already fallen sharply, take another hit when euro zone governments begin the tough task of refinancing huge amounts of borrowing early next year.