The rupee, somehow, managed to resist steep fall against the dollar in the currency market during the week, ended on October 25, 2008. On the interbank, the rupee was marginally lower by 30 paisa versus the greenback for buying at 81.50 and it also shed 15 paisa for selling at 81.55.
The rupee followed suit on the open market, losing 20 paisa in terms of the dollar for buying and selling at 82.70 and 83.20. The rupee also came down sharply versus the euro for buying and selling at Rs 105.50 and Rs 105.70.
The rupee stuck in the moribund economy, as there is no sign of any recovery in any sector in the near future mainly because of rising fears of world recession.
The State Bank of Pakistan's (SBP) reserves represented about one-and-a-half months of import cover. Some anticipations appeared that despite the expected negotiations with the International Monetary Fund (IMF), the rupee was likely to weaken in the short-term.
The basic fundamentals have not changed and until we see foreign inflows the rupee may not be able to show any strength versus the dollar.
The economy was badly hit by soaring global oil and food prices over the past year and the new government's economic troubles were exacerbated by the failure of the previous administration to cut fuel subsidies.
INTER-BANK MARKET RATES: On Monday, the rupee rose by 1.90 versus the rupee for buying at 81.20 and it also gained 1.80 for selling at 81.40.
On Tuesday, the rupee strived to hold its overnight levels against the dollar, but failed to retain, losing 25 paisa for buying at 81.45 and it also shed 10 paisa for selling at 81.50.
On Wednesday, the rupee gained five paisa against the dollar for buying and selling at 81.40 and 81.45. On Thursday, the rupee retained its overnight against the dollar for buying and selling at 81.40 and 81.45.
On Friday, the rupee depicted slight fall of five paisa against the dollar for buying and selling at 81.45 and 81.50.
At the week-end, the rupee shed further five paisa against the dollar for buying and selling at 81.50 and 81.55 amid slow business.
WORLD VALUE OF DOLLAR: In the beginning session of the week, the yen fell against the euro and the Australian dollar on Monday as news that a crisis summit was planned for next month helped the market regain some stability and prompted investors to pick up recently battered currencies.
During the second Asian trading session, the dollar held near a 16-month high against a basket of currencies, benefiting from worries over a deterioration in the global economy.
The US currency edged up as traders cited ongoing demand from banks picking up dollars for their funding needs, as well as some speculation that market players needed to acquire dollars to settle credit derivatives tied to the bankruptcy of Lehman Brothers.
During the third Asian trading session, the euro extended losses against the dollar and yen, hit by a bleak economic outlook and expectations for lower interest rates in the euro zone.
The euro hit a fresh 20-month low against the dollar to a low of $1.3002 and fell to a four-year low against the yen of 130.17 yen. During the fourth Asian trading session, the dollar hit a two-year high against a basket of currencies as concerns about a worsening global economy prompted investors to cut risky assets.
The yen hit a six-year peak against the euro and a seven-month high versus the dollar as Japanese investors continued to repatriate overseas investments they had made in recent years to make up for low domestic yields.
During the final Asian trading session, the yen hit a 13-year peak against the dollar and a six-year high versus the euro as fears of a deep global economic recession and emerging market troubles prompted many investors to cut overseas investments and repatriate funds.
But the dollar jumped to a five-year high against the pound and held near two-year highs versus the euro as deepening financial turmoil forced more investors to dump investments around the world and raise their cash holdings in the greenback.
In NY market, the US dollar surged to two-year peaks versus a basket of currencies on Friday as dismal economic data from Europe reinforced fears of a global recession, adding to a selling frenzy on world stock markets.
The yen soared to multiyear highs versus the dollar and euro on the ensuing risk aversion, while at the low the British pound suffered its biggest one-day percentage drop against the US currency since September 1992, according to Reuters data. For the next week, the dollar should extend its relentless advance against virtually every currency except the yen as global recession fears keep investors fleeing risky assets for the relative safety of the greenback.
A global market rout on Friday that battered stocks from Tokyo to New York and sent commodity prices tumbling kept investors in a state of almost perpetual panic. They reacted by yanking money out of higher-yielding assets to salt it away in dollars, a valued safe-haven in times of turmoil.
OPEN MARKET RATES: On October 20, the rupee gained 1.20 against the dollar for buying at 82.50 and it also rose by Re.one for selling at 83.00 till 18:00. In the meantime, the rupee touched the high level at 86 in relation to the dollar just at the starting session of the day. The rupee also gained sharply against the euro for buying and selling at Rs 110.85 and Rs 111.00.
On October 21, the rupee did not show any change against the dollar for buying and selling at 83.00. The rupee rose sharply against the euro for buying and selling at Rs 108.15 and Rs 108.30.
On October 22, the rupee failed to retain its firmness, shedding 50 paisa against the dollar for buying at 83.00 and it also lost 20 paisa for selling at 83.20 till 17:00, they said.
The rupee rose sharply against the euro for buying and selling at Rs 108.15 and Rs 108.30, they added. On October 23, the rupee retained its overnight level against the dollar for buying at 83.00 while it fell and dropped by 50 paisa for selling at 83.70 till 17:00 hours.
The rupee appreciated against the euro for buying and selling at Rs 106.90 and Rs 107.10. On October 24, the rupee was sharply higher against the dollar, gaining 80 paisa for buying at 82.20 and it appreciated by Re.one for selling at 82.70 till 17:00 hours.
The rupee extended its gains against the euro for buying and selling at Rs 104.20 and Rs 104.40. On Saturday, the rupee gave up its overnight gains, losing 50 paisa against the dollar for buying and selling at 82.70 and 83.20 at 16:00 hours. The rupee also fell versus the euro, shedding 1.30 for buying and selling at Rs 105.50 and Rs 105.70.
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