The rupee was under pressure due to strong demand for dollars during the week ended on December 20, 2008. In the interbank market, the rupee struggled to recover its lost ground, gaining 1.20 against the dollar for buying and selling at 78.70 and 78.80.
The rupee, however, failed to act as it did on the interbank market because it lost 50 paisa for buying and selling at Rs 79.50 and Rs 80.00 respectively. It, however, performed well versus the euro, gaining sharply for buying and selling at Rs 107.50 and Rs 108.50.
It was noticed that despite the rising demand for the US currency the rupee managed to trim losses during the last sessions of the week. It is most likely that the rupee may move positively versus the dollar in the coming days after news of some economic development in the basic fundamentals.
To meet the payment requirements, most banks bought dollars, which caused shortage of dollars.
Besides, according to the news, the Standard and Poor's Ratings Services raised Pakistan's sovereign rating to CCC-plus from CCC, citing stability in its external financial position after the International Monetary Fund (IMF) disbursed its first loan tranche. "The outlook is developing, which means the next rating action could be upward or downward. "The (IMF) disbursal appears to have stabilised the sovereign's foreign reserve position, substantially alleviating the prospects of near-term debt service stress," said the rating agency in a statement".
It is a positive development that the S&P said ratings could be raised if Pakistan is able to meet the targets set by the IMF and is thereby able to get more donor support. But it also said the rating could be cut if there are shortfalls in meeting key fiscal and monetary benchmarks. According to the weekly statement by the State Bank of Pakistan (SBP), country's foreign exchange reserves rose 245 million dollars to 9.34 billion dollars in the week that ended on December 13, 2008.
INTER-BANK RATES: On Monday, the dollar was strong as the rupee lost 1.10 in relation to the greenback for buying at 79.90 and it also fell by 1.15 for selling at 80.00. On Tuesday, the rupee lost 1.30 against the dollar for buying and selling at 81.20 and 81.30.
On Wednesday, the rupee managed to give up its overnight weakness against the dollar, gaining 1.80 for buying and selling at 79.40 and 79.50. On Thursday, the rupee shed five paisa for buying at 79.45 while it maintained its overnight level for selling at 79.50.
On Friday, the rupee gained five paisa against the dollar for buying and selling at 79.40 and 79.45. On Saturday, the rupee extended its gains, rising 70 paisa versus the dollar for buying at 78.70 and it also rose by 65 paisa for selling at 78.80.
OPEN MARKET RATES: On December 15, the rupee slipped against the dollar, falling 40 paisa for buying at 78.40 and it also shed 20 paisa for selling at 78.70 owing to higher demand by the leading banks. The rupee was also sharply lower versus the euro for buying and selling at Rs 105.20 and Rs 105.40.
On December 16, the rupee continued overnight slide against the dollar, losing 1.70 for buying at 80.10 and it also lost 1.60 for selling at 80.30.
The rupee dipped in relation to the euro for buying and selling at Rs 107.90 and Rs 108.20. On December 17, the rupee shrugged off its overnight weakness, rising 1.60 for buying at 78.50 and it also gained 1.50 for selling at 78.80, they said. The rupee rose sharply in relation to the euro for buying and selling at Rs 109.50 and Rs 109.65 as the dollar dipped in the world market, they said.
On December 18, rupee was unmoved versus the dollar for buying at 78.50 while it lost 20 paisa for selling at 79.00. The rupee also fell sharply in relation to the euro for buying and selling at Rs 112.00 and 112.50. On December 19, the rupee lost 50 paisa against the US currency for buying and selling at 79.00 and 79.50, they said. The rupee, however, rose versus the euro for buying and selling at Rs 108.50 and Rs 108.70. On December 20, the rupee continued its fall against the dollar, shedding 50 paisa for buying and selling at 79.50 and 80.00. The rupee also rose in terms of the euro for buying and selling at Rs 107.50 and Rs 108.50.
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