Higher demand for dollars by importers to clear their payments pushed the rupee lower against the US currency during the week ended on July 30, 2010. On the interbank market, the rupee was down by 10 paisa versus dollar for buying at 85.65 and 12 paisa for selling at 85.70.
On the open market, the rupee resisted sharp fall against the US currency, shedding 5 paisa for buying at 85.75 while it was unchanged for selling at 85.90. The rupee also came down by 45 paisa versus euro for buying and selling at Rs 110.70 and Rs 111.20.
It was noticed that the rupee lost lightly against dollar due to strong buying by importers to make payments. As a result of higher payments for import bills, according to the State Bank of Pakistan (SBP), the foreign exchange reserves fell to 16.56 billion dollars.
In order to bring the economy back on track, according to reports, the SBP last Friday unexpectedly announced an increase in its key policy rate to 13 percent from 12.5 percent, saying that it needed to fight inflation and counter a widening fiscal deficit. Announcing the monetary policy for the next two months, the central bank's acting governor Yaseen Anwar said that monetary policy needed to mitigate risks to economic stability. "Therefore, SBP is increasing the policy rate by 50 basis points to 13 percent with effect from August 2," Anwar said.
INTER-BANK MARKET RATES: On Monday, the rupee shed four paisa versus dollar for buying at 85.59 and six paisa for selling at 85.64.
On Tuesday, the rupee rose by four paisa versus dollar for buying and selling at 85.55 at 85.60.
On Wednesday, the rupee shed four paisa against dollar for buying at 85.59 and three paisa for selling at 85.63. On Thursday, the rupee lost 6 paisa versus dollar for buying at 85.65 and seven paisa for selling at 85.70.
On Friday, the rupee retained its overnight levels against dollar for buying and selling 85.65 and 85.70.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the euro hit a seven-week high against yen as a rise in shares prompted dealers to unwind long yen positions, but scepticism about the credibility of the eurozone's bank stress tests limited its gains versus dollar. Traders said interbank players, who had bet that the euro would fall below the key 110 yen level, or an 8 1/2-year low of 107.30 yen reached in late June, were forced to dump their short positions as upbeat US corporate earnings improved investor risk appetite, boosting riskier assets.
The yuan closed slightly higher against dollar on Monday after the People's Bank of China set a slightly higher mid-point, a move that dealers said indicated that the central bank wanted the yuan to remain stable for now.
Interbank buy/sell rates for the taka against dollar on Monday: 69.40/69.41 (previous 69.40/69.40); Call Money Rates: 2.50-3.00 percent (previous 2.50-3.15 percent). In the second Asian trade, the euro ticked up towards a two-month peak above $1.3000, although traders were cautious about bidding it up too much as they awaited clarity on Deutsche Bank's exposure to euro zone sovereign debt.
Indian rupee was trading at Rs 47.05 versus dollar; Malaysian ringgit was available at 3.1880; and Chinese yuan was trading at 6.7761 in relation to the US currency.
Interbank buy/sell rates for the taka against the dollar on Tuesday: 69.40/69.42 (previous 69.40/69.41); Call Money Rates: 2.50-3.00 percent (previous 2.50-3.00 percent). Some currency experts said that the rupee might decline slightly as a result of strong demand by importers to meet the payments.
In the third Asian trade, the euro hovered below a key level against dollar, dented by profit-taking after it hit an 11-week high, while the Australian dollar fell as inflation data pared the chances of an interest rate rise next week.
The euro was flat at $1.2994, failing to hold above the psychological and technically crucial level of $1.30 after it rose to a high of $1.3045 on Tuesday. The $1.30 level coincided with a 61.8 percent Fibonacci retracement of the euro's sell-off since mid-April. Indian rupee was trading at Rs 46.65 versus dollar; Malaysian ringgit was available at 3.1930 in term of the greenback; and Chinese yuan was trading at 6.779.
In the fourth Asian trade, the euro dipped against yen, pulling away from a recent two-month high on selling by Japanese exporters, while the kiwi struggled after New Zealand's central bank raised interest rates, but warned that further hikes could be more gradual.
Interbank buy/sell rates for the taka against the dollar on Thursday: 69.41/69.43 (previous 69.40/69.42); Call Money Rates: 2.50-3.00 percent (previous 2.50-3.00 percent). Indian rupee was trading at 46.76 against dollar; Malaysian ringgit was available at 3.1970 in terms of the US currency; and Chinese yuan was trading at 6.777 versus dollar.
In the final Asian trade, the dollar fell to an eight-month low against yen, hurt by selling from Japanese exporters and concerns that US GDP data would add to signs of fading momentum for the US economic recovery. In Asian trade, the dollar's fall was primarily driven by month-end selling from Japanese exporters, which overwhelmed buying from several new Japanese investment funds launched on Friday.
Indian rupee was available at Rs 46.53 versus dollar; Malaysian ringgit was trading at 3.1860 in terms of the US currency; and Chinese yuan was trading at 6.773 in terms of the greenback. After showing muted reaction to European Bank stress test results, the euro was unlikely to add much to its gains against dollar as investors focused on eurozone economic weakness.
Friday's test results failed to add significant impetus to euro's rally. While it edged up to an 11-week high versus the US currency of $1.3036 on Tuesday, the single European currency wouldl soon head lower as volatility subsides, analysts said. Despite Tuesday's gains, the euro hovered near levels in London on Friday, when test details began to trickle out and showed all but seven of 91 European banks could cope with another recession. Analysts said that technical resistance was also capping euro gains.
The euro rallied more than 6 percent versus dollar during July, putting it on track for its best monthly showing since May 2009, but much of its strength was the result of a weaker dollar as the US economic outlook deteriorated. Many analysts had expected that as long as the stress tests unearthed no nasty surprises, the euro could take a further step upwards once the event risk was over.
OPEN MARKET RATES: On July 26, the rupee was down by five paisa versus dollar for buying and selling at 85.75 and 85.95, it gained 30 paisa against euro for buying and selling at Rs 109.95 and Rs 110.45.
On July 27, the rupee was up by five paisa versus dollar for buying and selling at 85.70 and 85.90, but lost 80 paisa against euro for buying and selling at Rs 110.75 and Rs 111.25. On July 28, the rupee was down by five paisa versus dollar for buying at 85.75 while it retained its overnight level for selling at 85.90. The rupee resisted sharp erosion versus euro, shedding five paisa for buying and selling at Rs 110.80 and Rs 111.30.On July 29, the rupee was lower by five paisa against dollar for buying and selling at 85.80 and 85.95. The rupee fell sharply against euro, down by 50 paisa for buying and selling at Rs 111.30 and Rs 111.80.
On July 30, the rupee gained five paisa against dollar for buying and selling at 85.75 and 85.90. The rupee rose by 60 paisa in relation to euro for buying and selling at Rs 110.70 and Rs 111.20.
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