The rupee moved both ways versus dollar as it gained solid grounds in the early sessions, trimming most of the gains in the last session, but somehow, it held the upside amid shortened week ended on March 14, 2009. On the interbank market, the rupee rose by 21 paisa against the dollar for buying at 80.44 and 23 paisa for selling at 80.47.
On the open market, the rupee showed no variation in terms of dollar, retaining its level for buying and selling at 80.30 and 80.80. The rupee fell versus the euro, losing Rs 1.80 to Rs 103.00 and it also shed Rs 1.50 to Rs 104.50.
Surprisingly, the rupee managed to halt sharp losses against the dollar despite the rising demand for the US currency. In the meantime, it seemed that the rupee may come under pressure and face depreciation in the near future.
It is understood that balance of payments (BoP) is not shrinking; instead, it is widening due to sharp rise in imports because exports have been falling in the absence of fresh demand by the importing countries.
It is a fact that the government is giving incentives to the textile exporters to increase exports but it appears that export of the non-textile items showed slight rise during the last 9 months of the current fiscal year 2008-09. Inflows, in the shape of foreign investment were not coming in into the country, which is also a factor behind the weak economy. Additionally, improvement in the law and order situation can help in attracting foreign investors.
Unending protests and discussions on the judiciary issue have been causing jitters among the masses. Because, those who are not able to get bread for their meal, how they can be able to think about other issues.
The main hurdles behind the weak economy are political uncertainty, long marches and strikes, as these are affecting the trade and business activities in the country. Due to prevailing political situation in the country, industrial production is moving downward, which is a negative sign for economic uplift.
Political stability is also a very significant factor to achieve the desired target. Textile exports are already under pressure due to tough competition in the world market. Stability on both political and economic sectors is must to tackle the emerging challenges after world recession and weak economic outlook in the country. Recent political unrest and lack transportation of raw material was becoming difficult. As a result the industrialists are unable to deliver their export orders in time.
Underlining the need for strengthening the democratic system in the country, economic uplift is impossible without political stability. Besides, foreign and local investors are reluctant to invest in the country due to political uncertainty.
The business community cannot afford strikes and sit-ins as these mar business activities, thus causing loss in billions of rupees per day, and many are losing their jobs.
Besides, to revive the economic activity in the country, the governor of the State Bank of Pakistan said that cut in interest rate would help the economy in the coming days.
INTER-BANK RATES: On Monday, the rupee firmly held its week-end level in relation to dollar for buying and selling at 80.65 and 80.70. On Tuesday, the currency market was closed due to Eid-Milad-un-Nabi holiday. On Wednesday, the rupee gained 30 paisa versus dollar for buying and selling at 80.35 and 80.40.
On Thursday, the rupee rose by 5 paisa against the dollar for buying and selling at 80.30 and 80.35.
On Friday, the rupee held its overnight levels against the dollar for buying and selling at 80.30 and 80.35. On Saturday, as a result of political agitation, the rupee lost 14 paisa against dollar for buying at 80.47 and 80.47.
WORLD VALUE OF DOLLAR: Amid first Asian trade, the dollar dipped against the euro as investors trimmed safe-haven buying of the dollar after last weeks US payrolls data showed that job losses were less severe than many had feared.
The yen trimmed its losses vs the dollar and dipped against the euro, weighed down by data showing that Japan posted a record current account deficit of 172.8 billion yen ($1.76 billion) in January.
In the second session, the yen fell across the board as doubts about its status as a safe port in the global economic gloom eroded its standing with overseas investors, who are concerned about Japans own weak economic outlook.
In the third Asian trade, the dollar dipped against the euro after US shares rallied the previous day on news that Citigroup was profitable in the first two months of 2009, tempering safe-haven buying of the dollar.
Amid fourth session of Asian market, the yen rose over 1 percent versus the dollar on Thursday, adding to sharp gains the previous session, while the New Zealand dollar briefly hit a two-week high after its central bank cut rates less than some had expected.
Amid final session of Asian market, the euro rose to a two-month high against the Swiss franc and the dollar also firmed against the franc, after the Swiss National Bank said it was intervening in the face of a growing risk of deflation.
The Swiss central bank cut rates on Thursday and said it was implementing a decision to buy foreign currencies, driving the euro up more than 3 percent and the dollar up more than 2.5 percent against the franc.
In the New York, the dollar gave up its gains against the euro in volatile trade as US stocks closed the week in positive territory, prompting investors to take on more risk.
The dollar on Friday was headed for its first weekly decline in five weeks against a basket of currencies after gains in stock markets this week eroded safe-haven flows into the greenback.
Persistent worries about the global economy and banks have kept investors averse to risk in recent months, prompting them to seek shelter in dollar-denominated assets. Despite this weeks drop, the dollar index was up nearly 8 percent for the quarter. "The dollar will continue to track equity markets," said Matt Esteve, a foreign exchange trader at Tempus Consulting in Washington.
"If equities are able to maintain their momentum from this week, then I think well see the dollar push back towards the lower end of its ranges against most currencies, specifically against the euro and sterling," he added.
OPEN MARKET RATES: On March 9, the rupee failed to resist fresh decline versus the dollar, shedding 10 paisa for buying at 80.30 and it also lost 30 paisa for selling at 80.80. The rupee shed 20 paisa versus the euro for buying at Rs 101.20 while it retained its level for selling at Rs 103.00.
On March 10, no change was seen in the rupee value versus the dollar and euro for buying and selling following the holiday. On March 11, the rupee did not show any change against the dollar for buying at 80.30 while it gained 10 paisa for selling at 80.70.
The rupee lost 30 paisa in relation to the euro for buying at Rs 101.50 it. However, it rose by 50 paisa for selling at Rs 102.50. On March 12, the rupee gained 10 paisa against the dollar for buying at 80.20 and it also rose by 20 paisa for selling at 80.50. The rupee lost 30 paisa in relation to the euro for buying at Rs 101.80 it also shed 50 paisa for selling at Rs 103.00.
On March 13, the rupee maintained its overnight levels against the dollar for buying at 80.20 and selling at 80.50. The rupee continued its overnight weakness against the euro, shedding one rupee for buying at Rs 102.80 and it also lost 50 paisa for selling at Rs 103.50. On March 14, the rupee was down with modest fall in its value against the dollar, slipping 10 paisa for buying at 80.30 and dropping by 30 paisa for selling at 80.80. The euro started showing its muscles versus the rupee after riding over the dollar in the world market. The single European currency gained 20 paisa for buying at Rs 103.00 and it also rose by Re.one for selling at Rs 104.50.
Comments
Comments are closed.