The rupee-dollar official parity rates moved both ways in the currency market last week ended on October 21, dealers said. Money experts said that higher import payment bills wiped out dollars excess supply from overseas Pakistanis as, traditionally, the rupee gained momentum versus US currency on the eve of easy supply of dollars during Ramazan, money experts said.
Besides, payments of profits to multinational companies (MNCs) were also an added factor behind dollars' shortage in the market, they said. Sometimes dollar demand was high and importers bought nearly 40-50 million dollars, they said.
Currency analysts said that if a lift occurs in the exports, the foreign exchange earnings may improve from the current levels. Commenting on the falling trend in exports of textile products, experts said that the exporters should keep a close watch over the world market trend and then they can beat the counterparts and also will be able to grab their due share.
In the meantime, exports suffer $2 billion loss due to reduction in duty drawback rates on imports of raw material/inputs used in the finished products exported during 2005-06.
The rupee, however, strengthened versus euro, which failed to maintain its firmness due to dollar's recovery versus major currencies following some positive US data, they said.
According to State Bank of Pakistan (SBP) weekly data, the country's foreign exchange reserves fell 40 million dollars to 12.52 billion dollars in the week ending on October 14.
The reserves held by the State Bank of Pakistan dropped to 10.255 billion dollars from 10.289 billion dollars a week earlier, while those held by commercial banks fell to 2.266 billion dollars from 2.272 billion dollars, the central bank said in a statement. In interbank market, the rupee gained three paisa versus dollar for buying and selling at Rs 60.61 and Rs 60.63, respectively, dealers said.
In the open market, however, the rupee fell in relation to dollar for buying and selling at Rs 60.55 and Rs 60.60, they said. The local currency also slid versus euro, losing 27 paisa for buying and selling at Rs 76.03 and Rs 76.13, they said.
OPEN MARKET RATES: On Monday, the rupee gained 8 paisa versus dollar for buying and selling at Rs 60.50 and Rs 60.55, respectively. The rupee gained 49 paisa versus euro for buying and selling at Rs 75.66 and Rs 75.76, dealers said.
On Tuesday, the rupee gained 10 paisa versus dollar for buying and selling at Rs 60.48 and Rs 60.53, respectively, and versus euro it gained 7 paisa for buying and selling at Rs 75.59 and Rs 75.69, they said.
On Wednesday, the rupee shed 2 paisa against dollar for buying at Rs 60.50 and 7 paisa for selling at Rs 60.60, while versus euro it lost 20 paisa for buying and selling at Rs 75.68 and Rs 75.78, respectively.
On Thursday, the rupee shed 2 paisa versus dollar for buying at Rs 60.52 and recovered 3 paisa for selling at Rs 60.57 and lost 4 paisa versus euro for buying and selling at Rs 75.72 and Rs 75.82, they said. On Friday, the rupee did not show any change for buying at 60.52 while it shed 5 paisa for selling at Rs 60.62, they said.
Versus the euro, the rupee lost 44 paisa for buying and selling at 76.16 and Rs 76.26, dealers said. On Saturday, the rupee lost 3 paisa versus dollar for buying at 60.55 but picked up 2 paisa for selling at Rs 60.60. Versus the euro, the rupee gained 13 paisa for buying and selling at 76.03 and Rs 76.13, they said.
WORLD VALUE OF DOLLAR VS OTHER CURRENCY UNITS: On Monday, the dollar held near a 10-month peak against the yen after upbeat US data last week on retail sales and consumer sentiment further squashed expectations for the Federal Reserve to cut rates early next year.
On Tuesday, the dollar steadied after falling on profit-taking, as investors turned to inflation and capital flows data due later in the session for clues on whether the dollar has room for a further rise.
Traders said they were also keeping a close eye on US media reports saying the United States has detected signs in North Korea that it may be preparing for a second nuclear test.
The next day, the dollar rallied, a day after its biggest loss against a basket of currencies in three months, as key technical support levels held and forced traders who had bet the currency would fall to buy it back.
The dollar remained near a two-week low against a basket of currencies, however, with no US economic data to drive direction and investors adjusting positions ahead of next week's Federal Reserve policy meeting.
Long considered a truism, the idea that "political gridlock is good for financial markets" may prove false for the US dollar after the US Congressional elections next month.
Recent opinion polls show the Democratic party has a good chance of winning control of Congress in the November 7th elections, increasing the risk of dollar-negative reforms.
On Friday, the dollar edged up against the yen on Friday but stayed in sight of the previous day's lows as investors sought more clues on the US rate outlook ahead of a policy meeting of the Federal Reserve next week.
The dollar trimmed losses after it tumbled on Thursday on data showing a surprising fall in manufacturing activity in the US Mid-Atlantic region that revived concerns about the health of the US economy. The dollar rallied earlier this month on a run of upbeat economic data that reduced speculation that the Fed could cut rates early next year.
INTERBANK RATES: On October 16, the rupee, slipped versus dollar for buying and selling at Rs 60.64 and Rs 60.66, respectively. On October 17, the rupee shed one paisa versus dollar for buying and selling at Rs 60.65 and Rs 60.67, respectively.
On October 18, the rupee gained 12 paisa versus dollar for buying at Rs 60.53 and 13 paisa for selling at Rs 60.54. On October 19, the rupee lost 7 paisa for buying and selling at 60.60 and 60.61, dealers said. On October 20, the rupee was slightly lower versus dollar for buying at 60.61 and shed one paisa for selling at 60.63, they said.
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