In the beginning the New Year 2012, the dollar continued its riding over the rupee's weakness during the week, ended on December 7, 2012. In the inter-bank dealings, during the week, the rupee shed 48 paisa against the dollar for buying at 90.60 and it also lost 50 paisa for selling at 90.65.
On the open market, the rupee fell sharply in relation to the dollar for buying and selling at 91.10 and 90.30 and it, however, managed to gain 55 paisa versus the euro for buying and selling at Rs 115.48 and Rs 115.98.
The rupee is losing ground versus the dollar due to weak fundamentals and it has no doubt that the rupee may continue its fall in the coming days. In fact, there were some oil import payments but on the other hand few inflows of dollars helped the rupee to resist sharp losses. The basic concern is about the direction of economy, which is showing no improvement in the absence of availability of basic needs, the mills and industries are facing gas and power shortage, causing uncertainties. Additionally, there were concerns on the economic front as the country's current account deficit stood at 2.104 billion dollars in July-Nov compared with 589 million dollars in the same period a year earlier.
Under the circumstances it looks that the may widen further in the coming months because of debt repayments and a lack of external aid. Other major factor is, the country has to start paying back an 8 billion dollars International Monetary Fund (IMF) loan in the near future, and it is very difficult for the country's foreign exchange reserves to maintain its present position.
Some analysts were of the view that the State Bank of Pakistan (SBP) may status quo the policy rate after sharp fall in the rupee value in relation to the dollar at 91.30.
INTER-BANK MARKET RATES: On Monday, rates were not available due to bank closing. On Tuesday, the rupee failed to retain its firmness against the dollar, shedding 19 paisa for buying and selling at 90.12 and 90.15. On Wednesday, the rupee extended its overnight fall, losing more eight paisa for buying at 90.20 and it also fell by 10 paisa for selling at 90.25.
On Thursday, the rupee fell sharply against the dollar for buying and selling at 90.40 90.45. On Friday, the rupee continued its slide as it depreciated by 20 paisa in terms of dollar for buying and selling at 90.60 and 90.65.
OPEN MARKET RATES: On December 2, the rupee did not show any change in terms of the dollar for buying and selling at 89.90 and 90.10. Versus the euro, the rupee fell, losing 16 paisa for buying and selling at Rs 116.03 and Rs 116.53, respectively.
On January 3, the rupee shed 10 paisa in terms of the dollar for buying and selling at 90.00 and 90.20. Versus the euro, the rupee also drifted lower, losing 89 paisa for buying and selling at Rs 116.76 and Rs 117.26. On January 4, the rupee depreciated by 15 paisa against the dollar for buying and selling at 90.15 and 90.35. The rupee also lost 53 paisa in terms of the euro for buying and selling at Rs 117.29 and Rs 117.79.
On December 5, the rupee shed 15 paisa for buying and selling at 90.30 and 90.50. Versus the euro, the rupee, however, gained 94 paisa for buying and selling at Rs 116.35 and Rs 116.85.
On December 6, the rupee also lost 35 paisa in relation to dollar for buying and selling at 90.65 and 90.85.
The rupee, however, maintained its surge against the euro, rising by 78 paisa for buying and selling at Rs 115.57 and Rs 116.07.
On December 7, the rupee lost 45 paisa in relation to the dollar for buying and selling at 91.10 and 91.30. Versus the euro, the rupee, however, rose by nine paisa for buying and selling at Rs 115.48 and Rs 115.98.
OVERSEAS OUTLOOK FOR DOLLAR: In the beginning session, financial markets in Australia, China, Hong Kong, Japan, Malaysia, New Zealand, Singapore and Thailand were closed for a public holiday, said Reuters. The Indian rupee fell in its first session of 2012 on demand from oil importers, though losses were limited by a turnaround in domestic stocks and dollar-selling by foreign banks.
Volumes were light in the dollar-rupee market as many investors chose to stay away in the absence of trading in major overseas markets, which were closed for the New Year holiday. The rupee settled at 53.30/31 to the dollar, 0.4 percent down from Friday's close of 53.08/09, after dipping to 53.34 in early trade.
In the second Asian trade, the euro edged higher against the dollar and the yen on Tuesday but touched a record low versus the Australian dollar and looked set to remain under pressure in 2012 on worries over Europe's debt crisis.
The euro gained a bit of reprieve as a rise in Asian equities underpinned risk appetite and spurred short-covering, helping it stay above an 11-year low against the yen touched the previous day.
The dollar was trading versus the Indian rupee at Rs 53.22, the US currency was available versus the Malaysian ringgit at 3.1470 and the greenback was trading in relation the Chinese yuan at 6.294 per unit. In the third Asian trade, a short-squeeze rally in the euro stalled ahead of debt auctions in Germany, with market players dubious about the euro zone's plans to fend off a sovereign debt crisis as some countries face huge debt refinancing needs.
The euro is meeting resistance after posting its biggest one-day rally in nearly two months on Tuesday as investors heavily trimmed bearish positions in the common currency after upbeat data bolstered risk appetite. China's yuan ended slightly weaker after hitting an intraday record high against the dollar on Wednesday in the wake of a strong mid-point fixing, which underpinned expectations the Chinese currency will rise further in the near term. Inter bank buy/sell rates for the taka against the dollar. 82.08-82.10 (previous 82.01-82.05) Call Money Rates: 12.00-20.00 percent (previous 8.00-20.00 percent). The dollar was trading versus the Indian rupee at Rs 53.13 and it was available at 3.1375 versus the Malaysian ringgit.
In the fourth session of Asia, the euro hovered just above multi-year lows against the yen and Australian dollar in Asia as markets refocused on concerns about the euro zone debt crisis ahead of a French debt auction later in the session.
France plans to raise up to 8 billion euros in 10- to 30-year debt a day after a subdued German bond auction. Berlin attracted only slightly better demand than was seem at a disastrous sale last year.
China's yuan closed slightly lower after the People's Bank of China set the mid-point 114 pips weaker than the previous day's record high, the biggest fall in seven weeks, signalling its intention to keep a lid on yuan appreciation.
Inter bank buy/sell rates for the taka against the dollar on Thursday. 82.20-82.45 (previous 82.08-82.10) Call Money Rates: 20.00 percent (previous 11.00-20.00 percent).
Reuters adds: In the final Asian trade, euro hit 16-month lows against dollar and sterling and hovered near an 11-year low versus yen, with further declines seen in store for the embattled single currency.
Market players said little relief was in sight for euro, with next week's Italian and Spanish government bond sales likely to keep the market on edge and the euro under pressure.
The euro dipped to as low as $1.2763 on trading platform EBS on Friday, its lowest level since September 2010. After trimming some losses euro stood at $1.2777, down 0.1 percent from late US trade on Thursday.
The dollar was available versus the Indian rupee at Rs 52.79, versus the Malaysian ringgit it was at 3.1480 and dollar was trading against the Chinese yuan at 6.3105 per unit.
Reuters adds: It has been a rough start to 2012 for the euro and it won't get any easier next week as the region grapples with a possible recession and two of its larger economies conduct a crucial test of investors' appetite for their debt.
In the first week of the year the euro has lost 1.8 percent and 1.6 percent of its value versus the safe-haven US dollar and yen, respectively. The losses were largely driven by a growing contrast between the recovery in the world's largest economy and Europe, which is widely believed to be either in, or headed toward, a recession.
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