The rupee has failed to show its stability versus the dollar during week ended October 14, 2006, money experts said. In fact, it came under observation that despite the increased supply of the greenback in the shape of the remittances, the rupee could not maintain a firm posture as importers rush for dollars to meet the import bills.
In the interbank market, the rupee after showing vulnerable trend versus the dollar during the week, somehow managed to retain its levels for buying and selling at 60.63 and 60.64, respectively, dealers said.
The rupee, however, shed five paisa versus the dollar for buying at 60.58 while it did not move for selling at 60.63, they said. It gained 50 paisa versus the euro for buying and selling at 75.74 and 75.84, they said. The trend in the currency market was purely depending on demand and supply factors as increased remittances by the overseas Pakistanis were good but not enough to meet the market requirements for making higher import payments, they said.
According to an official data, country's trade deficit widened to a provisional 1.0 billion dollars in September 2006 from 838 million dollars in the same period last year.
The trade deficit for July-September of fiscal 2006-07 was 3.2 billion dollars, compared with a deficit of 2.4 billion dollars in the same period a last year.
Reports said that the SBP has asked the banks to gear up their efforts to increase the remittances by overseas Pakistanis to get the desired target of 6 billion dollars, which was set for the current year.
The country's foreign exchange reserves, however, showed an increasing trend as the State Bank of Pakistan (SBP) issued statement during the week ended October 7, that reserves rose by 28.6 million dollars to 12,561.5 million dollars.
Some currency experts said the trade gap caused by sharp increase in the imports and falling trend in the exports, as in textile products, value-added items showed sharp decline. On the other hand, the government has very little to attract foreign investment through privatisation.
INTER-BANK RATES: On Monday, the rupee came under pressure versus the dollar, losing nine paisa versus the dollar for buying and selling at 60.63 and 60.64, respectively.
Supplies of dollars were tight as the foreign exchanges were remained closed in the US on Monday to observe the Columbus Day holiday.
On Tuesday, the rupee failed to come out of weak spells due to persisting demand for dollars, shedding two paisa for buying at 60.65 and losing three paisa for selling at 60.67.
On Wednesday, the rupee gained one paisa versus the dollar for buying and selling at 60.64 and 60.65, respectively.
On Thursday, the rupee, however, moved up slightly versus the dollar for buying and selling at 60.62 and 60.64, respectively.
On Friday, the rupee gave up its overnight firmness versus the dollar, losing two paisa for buying and selling at 60.60 and 60.62, respectively in process of trading, they said.
On Saturday, the rupee, however, shed its gains versus the dollar slightly for buying and selling at 60.63 and 60.64, respectively.
WORLD VALUE OF DOLLAR VERSUS MAJOR CURRENCIES: At the beginning sessions of the week, the dollar rose to its highest level in about seven months against the yen, with Japan's currency dealt a blow by reports that North Korea had conducted a nuclear test.
The dollar was also well supported by expectations that US interest rates are unlikely to fall any time soon given signs of strength in the jobs market.
But immediate market attention switched back to geopolitical tensions. North Korea's Central News Agency said that North Korea had carried out an underground nuclear test, while a US official said that intelligence cannot confirm that a test was conducted.
The next day, the yen hit an eight-month low against the dollar and also fell against the euro as traders cited talk of a report that North Korea had conducted a second nuclear test.
Traders cited talk of a report by Fox News that a second nuclear test had been completed, but there was no such report on the Fox web site.
In the world markets, on Wednesday, the dollar struck a 10-month high against the yen and a 5-1/2-month peak versus the Swiss franc on Wednesday as the market comes round to the view that the Federal Reserve is in no rush to cut interest rates.
A catalyst for the dollar's strength in the wake of upward revisions to past US payrolls data at the end of last week has been a growing view that the US economy may not be as weak as earlier thought, coupled with an eagerness to break the dollar out of ranges.
According to the Reuters, after maintaining a firm trend in the early sessions of the week, the dollar slipped from this week's 2-1/2 month high against an index of currencies on Thursday, trimming gains made after minutes from the Federal Reserve's last policy meeting dented expectations for an interest rate cut.
The minutes to the Fed's September meeting were hawkish, with policymakers remaining "quite concerned" about inflation risks and renewed their commitment to control inflation pressures.
On Saturday, the dollar hit a six-month high against the Swiss franc and a near three-month peak versus the euro after a series of US data further dashed expectations of a central bank rate cut in the near future.
The euro dropped below $1.25 for the first time since mid-July after the University of Michigan's consumer sentiment index posted a surprisingly large rise in October.
OPEN MARKET RATES: On October 9, against the interbank rates, the rupee gained seven paisa for buying and selling at 60.53 and 60.63, dealer said.
Versus the euro, the rupee also picked up six paisa for buying and selling at Rs 76.24 and Rs 76.34, they said.
On October 10, the rupee shed two paisa against the dollar for buying and selling at 60.60 and 60.65, dealer said.
The rupee lost 16 paisa against the euro for buying and selling at Rs 76.40 and Rs 76.50 in process of trading, they said.
On October 11, the rupee continued its decline versus the dollar, shedding two paisa for buying at 60.62 and losing seven paisa for selling at 60.72, dealers said.
The rupee, however, gained 64 paia versus the euro for buying and selling at Rs 75.96 and Rs 76.00, they said.
On October 12, the rising demand for the dollars by the corporate sector pushed the rupee sharply down, losing 12 paisa for buying at 60.72 and falling seven paisa on the selling side at 60.77, dealers said.
The rupee followed the same path versus the euro, shedding 15 paisa versus the dollar for buying and selling at 76.11 and 76.21, respectively.
On October 13, the rupee managed to trim its losses versus the dollar in the open market, gaining seven paisa for buying and selling at 60.65 and 60.70 respectively, dealers said.
The rupee also gained four paisa versus the euro for buying and selling at 76.15 and 76.25, respectively.
It picked up seven paisa versus the dollar for buying and selling at 60.58 and 60.63, moneychangers said.
Versus the euro, the rupee was up by 40 paisa for buying and selling, as the single European currency failed to maintain its firmness in the world markets, they added.
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