The rupee hit a new low against dollar in the interbank market during the week, ended on May 3, 2008, crossing the Rs 65 per dollar. It lost 70 paisa versus dollar for buying and selling at 65.12 and 65.15, and extending its losses to 5.4 percent since start of the year.
In the open market, too, the rupee lost 105 paisa for buying and selling at 65.80 and 65.90, and was heading to breach the mark of Rs 66 for a dollar. The rupee also shed 35 paisa in terms of euro for buying and selling at Rs 102.40 and 102.50.
Recent sharp falls in the rupee value widened the gap between open and interbank rates, ranging between 80 and 90 paisa during the last three months.
Market players were of the view that it was due to high demand for dollars from importers and other dominating factor hovering uncertainties on the economic and political fronts which pushed to rupee down.
Outflows exceeded the inflows because of payments, especially for oil, causing higher trade deficit, some currency analysts said. Soaring inflation, which hit a 13-year high of 14.12 percent in March, and the widening deficits had dampened sentiment, dealers said. There were reports that the State Bank of Pakistan (SBP) may take steps to cut the imports at home and increase exports, they said.
According to the weekly statement by the central bank, the country's foreign exchange reserves stood at 12.611 billion dollars--nearly four billion dollars less than a record high on October 31, 2007. Economic growth is seen slowing to 6 percent in the year ending June 30, after averaging 7 percent for the previous four years. The rupee has lost 5.7 since the start of the year and about 3 percent in April alone.
In the meantime, to minimise the losses in the Pak currency, the State Bank of Pakistan (SBP) spokesman Wasimuddin said on Wednesday that the licensed exchange companies have been directed to sell 15 percent, instead of earlier 10 percent, of foreign currencies to the interbank market. The companies handle remittances from Pakistanis working abroad.
Besides, exchange companies are required to ensure that they bring a minimum of 25 percent of foreign currencies exported by them in their foreign currency (FCY) accounts maintained with banks in Pakistan on an ongoing basis.
Furthermore, out of the amounts so brought in, exchange companies will be required to sell at least 10 percent in the interbank market, whereas the balance amount out of this 25 percent will be required to be withdrawn in cash US dollars from FCY accounts.
Expectedly, these preventive measures are likely to improve dollar availability in the interbank market, and could ease some pressure on the rupee.
But, there are speculations that the central bank would raise interest rates, both to curb import demand and a burgeoning fiscal deficit. INTER-BANK RATES: On Monday, the rupee tended lower versus the dollar, slipping 24 paisa for buying at 64.42 and it also lost 25 paisa for selling at 64.45.
On Tuesday, the rupee versus the dollar lost 10 paisa for buying at 64.52 and it also shed nine paisa for selling at 64.54 due to increased demand by the importers.
On Wednesday, the rupee shed seven paisa against the dollar for buying at 64.59 and it also lost eight paisa for selling at 64.62, they said.
On Thursday, the marker was closed due to Labour day holiday. On Friday, the rupee lost 31 paisa against the dollar for buying at 64.90 and its also shed 32 paisa for selling at 64.95, they said.
On Saturday, the rupee fell and lost 22 paisa in terms of the dollar for buying at 65.12 and it also dropped by 20 paisa for selling at 65.15, dealers said.
WORLD VALUE OF DOLLAR: In the first session of Asian trade, the dollar was slightly higher against the yen, as market players waited for fresh clues on the outlook for the US economy, dealers said.
The dollar edged up to 104.53 yen in Tokyo afternoon trade from 104.39 in New York late on Friday. The euro rose to 1.5653 dollars from 1.5624 and to 163.64 yen from 163.20.
Dealers were turning their attention to an interest rate decision by the US Federal Reserve due on Wednesday and the accompanying statement.
In the second session during the Asian trading, the US dollar was shackled in tight ranges ahead of a Federal Reserve meeting shortly and a welter of major economic data which could well decide the medium-term outlook for US interest rates.
In the third Asian trading, the dollar was little changed, with investors bracing for an expected Federal Reserve interest rate cut and a tweaked policy statement indicating the central bank may pause its aggressive run of rate slashes.
The prospect of the Fed taking a break from trying to underpin the weakening economy with lower rates has helped the dollar rebound from record lows struck versus the euro last week.
Amid final session of Asian trade, the dollar edged up against the yen as traders waited for a key US jobs report for fresh leads on the chances of further Federal Reserve interest rate cuts.
On Friday, fresh off its strongest month in nearly a year, the dollar looks set to extend its rally next week on signs the Federal Reserve is on hold after seven months of aggressive interest rate reductions that drove the US currency to record lows.
The Fed behaved largely as was expected last week by cutting the benchmark US interest rate by a quarter percentage point to 2.0 percent and by backing away from its previous assurance that it would continue lowering borrowing costs.
According to some analysts, the Fed's statement lacked the explicit signal that its easing cycle was over, but concerns that it might cut rates yet again eased after a run of economic data that was somewhat stronger than market forecasts.
Friday's employment report from the US Labour Department, in particular, allayed worry that rates could go still lower and do fresh damage to the dollar. While US employers cut jobs for a fourth straight month in April, job losses were not as steep as feared, and the unemployment rate fell unexpectedly to 5 percent.
OPEN MARKET RATES: On April 28, the rupee rose by ten paisa in terms of the dollar and for buying and selling at 64.75 and 64.85, dealers said.
The rupee also managed to recover 45 paisa in relation to the euro for buying at Rs 102.05 and it also gained 50 paisa for selling at Rs 102.15, they said.
On April 29, the rupee was lower by 25 paisa in terms of the dollar for buying and selling at 65.00 and 65.10 in process of trading, they said.
The rupee also followed same pattern in terms of the euro, losing Rs1.05 for buying and selling at 103.10 and Rs 103.20, they said. On April 30, the rupee fell sharply versus the dollar, losing 90 paisa for buying and selling 65.80 and 65.90 amid hectic buying of greenback, they said.
The rupee, however, lost 45 paisa in terms of the euro for buying and selling at Rs 102.65 and 102.75, they said. On May 1, the rupee-dollar official parity rates not received due to International Labour Day holiday. On May 2, the rupee gained 15 paisa in terms of the dollar for buying and selling 65.65 and 65.75 amid hectic buying of greenback, they said. The rupee also gained sharply versus the euro for buying and selling at Rs 101.60 and Rs 101.70, they said.
On May 3, the rupee also gave up 15 paisa gain in terms of the dollar for buying and selling at 65.80 and 65.90, they said. The rupee, however lost sharply by 80 paisa against the euro for buying and selling at Rs 102.40 and Rs 102.50, they said.
Comments
Comments are closed.