THE RUPEE: soft trend RECORDER REVIEW

KARACHI (December 06, 2010) : The rupee was lower against dollar and euro on currency market during the week ended on December 4, 2010. On the interbank market, the rupee fell by five paisa versus greenback for buying and selling at 85.85 and 85.90. In open market, it shed five paisa in relation to dollar for buying at 85.60 and 10 paisa for selling at 85.80, while versus euro, it lost Rs 1.21 for buying and selling at Rs 113.95 and Rs 114.45.

The rupee showed slight improvement versus US currency in the early session, but later it failed to retain its level due to higher demand for dollars. It appeared that the rupee would hit the low at 86 for a dollar, but some easy supply of dollars helped the rupee to minimise its losses.

INTER-BANK MARKET RATES: On Monday, the rupee gained 12 paisa in relation to dollar for buying and selling at 85.78 and 85.83. On Tuesday, the rupee rose by eight paisa in relation to dollar for buying and selling at 85.70 and 85.75.

On Wednesday, the rupee gained five paisa versus dollar for buying at 85.65 and seven paisa for selling at 85.68.

On Thursday, the rupee lost 10 paisa in relation to dollar for buying at 85.75 and 12 paisa for selling at 85.80. On Friday, the rupee lost 5 paisa against dollar for buying and selling at 85.80 and at 85.85.

On Saturday, the rupee shed 5 paisa against dollar for buying and selling at 85.85 and at 85.90.

WORLD VALUE OF DOLLAR: In the first Asian trade, the euro fell to its lowest in two months against dollar as the market looked past a rescue package for Ireland to other euro zone economies and a euro zone crisis resolution mechanism.

EU finance ministers endorsed an 85 billion-euro ($115 billion) loan package to help Dublin cover bad bank debts and bridge a huge budget deficit, and approved outlines of a permanent crisis-resolution system which could make private bond holders share the burden of restructuring sovereign debt bought after 2013.

China’s yuan ended slightly firmer against dollar on Monday as dealers cited month-end demand for the currency for trade settlements.

Dealers said that such purchases were temporary and would neither affect the yuan’s short-term nor long-term prospects, and the Chinese currency was likely to resume normal trading on Tuesday.

Indian rupee was trading at Rs 45.79 versus dollar, and Malaysian ringgit was available at 3.1530. In the second session of the week, the euro paused near 10-week lows but few traders thought the worst was over for the single European currency after a rescue package for Ireland failed to dampen speculation that other bailouts would be needed in the euro zone.

Many traders expected more selling in euro after Italian and Spanish 10-year bond yields jumped by more than 20 basis points on Monday, highlighting lack of confidence in the deal to help contain Ireland’s crisis.

The euro managed to hold above a 10-week low of $1.3064, hit on Monday, on trading platform EBS, helped by short-term oversold technical signs, but it slid to its latest two-month low against the yen and the Swiss franc.

Interbank buy-sell rates for taka against dollar: 70.39-70.42 (previous 70.35-70.38); Call Money Rates: 5.50-12.50 percent (previous 4.00-12.50 percent). China’s yuan, weakened against the dollar, but traded above the mid-point set by the People’s Bank of China as dollar hovered at 11-week highs in global markets. Indian rupee was trading at Rs 45.93 versus dollar, and Malaysian ringgit was available at 3.1570.

In the third Asian trade, the euro inched up but remained near 11-week lows against dollar in a market waiting to see what European policymakers would do next to contain worries about euro zone debt.

The euro suffered yet another setback as Standard & Poor’s threatened to cut the credit ratings of Portugal, but then stabilised above the previous day’s low of $1.2969, a level not seen since mid-September. Still, while small recoveries were not ruled out, few expected that its trials were over, with downside targets now at about $1.2800 and then its August lows around $1.2600. China’s yuan ended slightly higher against dollar on Wednesday, as dollar index fell slightly in early European trade. But dealers said that dollar had potential to rise as European debt worries lingered, which could add downward pressure on the yuan in coming days. Indian rupee was available at Rs 45.88 versus dollar and Malaysian ringgit was trading at 3.1600.

In the fourth Asian trade, the euro sat tight as investors waited to see if European Central Bank policy makers meeting later on Thursday would take any measures to alleviate worries over euro zone debt.

The euro posted its biggest one-day rise in more than a month on Wednesday in a dramatic turnaround from 11-week lows against dollar, as players cut short positions in the hope that ECB might calm the region’s debt crisis by taking new steps.

Interbank buy/sell rates for taka against dollar on Thursday: 70.48/70.50 (previous 70.44/70.47); Call Money Rates: 5.50-24.00 percent (previous 5.00-20.00 percent). China’s yuan closed up slightly against dollar on Thursday after the People’s Bank of China set a higher mid-point, indicating that it was letting dollar’s performance guide the Chinese currency’s movements.

The PBOC appeared to be letting the currency move inversely to US dollar index, but confining trade to a small range, partly to calm domestic opposition to the yuan’s steeper-than-expected rise since its mid-June depegging.

In the final Asian trade, euro’s rebound from a 2-1/2 month low stalled, though it retained most gains made after talk of European Central Bank buying of euro zone periphery debt helped knock down those yields.

The immediate focus of the market moved to US payrolls data later in the day, with a surprisingly strong US housing number adding to budding optimism on the US economy.

China’s yuan ended flat against dollar on Friday after the People’s Bank of China set a higher mid-point as the European Central Bank bought euro zone debt. Indian rupee was trading at Rs 45.12 and Malaysian ringgit was available at 3.1470.

At the weekend, in the NY market, the euro rose for a third straight day, though analysts said it was unclear whether it would extend its gains this week.

The euro’s gains on Friday accelerated after data showed that US economy added fewer jobs than expected in November, driving the jobless rate up to 9.8 percent.

It was also the second-largest one-day decline in the since May 2009. The euro rose 1.5 percent to $1.3414 on Friday, capping off its best three-day performance since May.

OPEN MARKET RATES: On November 29, the rupee picked up 15 paisa versus dollar for buying at 85.70 and five paisa for selling at 85.90. The rupee, however, lost 26 paisa in terms of euro for buying and selling at Rs 113.06 and Rs 113.56.

On November 30, the rupee rose by 10 paisa in relation to dollar for buying at 85.60 and 15 paisa for selling at 85.75. The rupee was sharply higher versus euro as it appreciated by Rs 3.75 for buying and selling at Rs 109.31 and Rs 109.81.

On December 1, the rupee picked up 10 paisa in relation to dollar for buying at 85.50 and 5 paisa for selling at 85.70. The rupee lost Rs 1.49 against euro for buying and selling at Rs 110.80 and Rs 111.30.

On Dec 2, the rupee did not show any change versus dollar for buying at 85.50 while it gained 5 paisa for selling at 85.65. The rupee lost 65 paisa against euro for buying and selling at Rs 111.45 and Rs 111.95.

On Dec 3, the rupee shed 15 paisa in relation to dollar for buying and selling at 85.65 and 85.80. The rupee also lost Rs 1.05 against euro for buying and selling at Rs 112.50 and Rs 113.00.

On Dec 4, the rupee gained five paisa in terms of dollar at 85.60 while it was unmoved for selling at 85.80. The rupee lost Rs 1.45 versus euro for buying and selling at Rs 113.95 and Rs 114.45 – Brecorder