The rupee moved cautiously against the dollar on the money market during the week ended on March 21, 2009. On the interbank market, the rupee fell by 12 paisa in relation to the dollar for buying at 80.50 and 10 paisa for selling at 80.52.
On the open market, the rupee retained its level against the dollar for buying at 80.30 and gained 10 paisa for selling at 80.60. The rupee was sharply down versus the euro, losing Rs 7 for buying at 108.10 and Rs 5 for selling to Rs 109.50.
Range-bound trading was seen on the currency market as the rupee resisted sharp fluctuations versus the dollar. The feature of the week was euros recovery in terms of the rupee as the single European currency improved after dollars fall on the international markets.
Business circles were hoping that the economy may lift from bottom if the world economic condition showed signs of improvement. In the meantime, the local currency was stable due to good supply of dollars. Dollar inflows would also help in keeping the value firm in the coming days. According to the reports, the outflows, in the shape of portfolio investment were not showing significant change due to erosion of confidence among foreign investors and economic crisis the world over.
Under the circumstances, recession is an extra burden on the local economy as the country has already chronic problems due to extraordinary dependence on import of several items, instead of preparing the nation to make all products at home. Because, more or less everyday reports appear that the government is importing high technology or high machines to bring revolutionary developments on the economic sector.
But, in fact, practically it could not materialise because the country is still on the way to import many items as it is not able to prepare the things on the home ground.
Till then, we will not give up so much depending on the imports, how the trade deficit will narrow. After world recession, many countries lowered the interest rate to help ailing economy and revive the trading activity, but in our country policy makers are still mulling about the next strategy of interest rates. Lets see how the head of the central bank settles the interest rate issue.
Positive development is that, according to the State Bank of Pakistan, the foreign exchange reserves rose by 110 million dollars to 10.16 billion dollars in the week ended on March 14.
INTER-BANK RATES: On Monday, the rupee managed to recover modestly, gaining 6 paisa for buying at 80.38 and five paisa for selling at 80.42. On Tuesday, the rupee inched up with slight rise of three paisa in terms of the dollar for buying at 80.35 and two paisa for selling at 80.40. On Wednesday, the dollar was trading at 80.35 and 80.40 for buying and selling.
On Thursday, the rupee lost 10 paisa in terms of the dollar for buying and selling at 80.45 and 80.50. On Friday, the rupee shed five paisa against the dollar for buying and selling at 80.50 and 80.55.
On Saturday, the rupee was unchanged for buying at 80.50 while it inched up after gaining three paisa for selling at 80.52.
OVERSEAS OUTLOOK FOR DOLLAR: In the first session of the week, the dollar rose broadly, with the market looking ahead to a Federal Reserve policy meeting on Tuesday and Wednesday
The yen and dollar slipped against higher-yielding currencies. In the third session of the Asian trading, the euro held close to a recent one-month high on the dollar and briefly forged to an 11-week peak against the yen, buoyed by improved investor confidence after surprisingly upbeat US and German data.
The yen showed limited reaction to the Bank of Japans decision to hold interest rates steady at 0.10 percent and increase its outright JGB buying to 1.8 trillion yen ($18.28 billion) per month from 1.4 trillion yen.
In the fourth session of the Asian trading, the dollar edged up against a basket of currencies, after logging its biggest daily fall in more than two decades as the US Federal Reserve said it would buy long-term Treasuries.
The dollar index rose 0.4 percent to 84.553. But that came after a 3 percent slide on Wednesday that was its biggest one-day drop since 1985, and traders said the dollar may resume its fall.
In the final session of the Asian trading, the dollar headed for its biggest weekly fall in 24 years as investors feared the Federal Reserves plans to buy longer-term government debt would erode the worlds reserve currency.
The dollar slid 5.1 percent against a basket of major currencies during the week. The rupee managed to hold its level as supply of dollars was enough to meet the rising demand by importers.
At the week-end, the dollar rebounded in NY trade, but still recorded its biggest weekly slide since 1985 as the Federal Reserves plans to buy long-term government debt stoked fear about the erosion of the US currency.
The Fed shocked financial markets when it said it would buy some $1 trillion of government and mortgage-backed debt in a bid to cut interest rates and kick-start lending.
OPEN MARKET RATES: On March 16, the rupee retained its weekend level against dollar for buying at 80.30 while it rose by 10 paisa for selling at 80.70. The euro maintained its week-end levels in relation to the rupee for buying and selling at Rs 103.00 and at Rs 104.50.
On March 17, the rupee looked ahead after gaining modestly against the dollar, rising 10 paisa for buying at 80.20 and gaining 20 paisa for selling at 80.50. The rupee shed 70 paisa versus the euro for buying at Rs 103.70 while it did not show any change for selling at Rs 104.50.
On March 18, the rupee remained unchanged against dollar for buying and selling at 80.20 and 80.50. The rupee, however, shed 30 paisa versus the euro for buying at Rs 104.00 and 50 paisa for selling at Rs 105.00. On March 19, the rupee maintained its overnight level against greenback for buying at 80.20 while it shed 10 paisa for selling at 80.60. The rupee fell sharply against the euro, losing Rs 3.50 for buying at Rs 107.50 and it also lost Rs 4.00 for selling at 109.00.
On March 20, the rupee was down by 10 paisa against the dollar for buying at 80.30 while it did not show any change for selling at 80.60. The rupee continued its slide in relation to the euro, sliding Rs 1.35 for buying at Rs 108.85 and Re.one for selling at Rs 110.00.
On March 21, the rupee did not show any change against the dollar for buying and selling at 80.30 and 80.60. The rupee, however, recovered 75 paisa versus the euro for buying at 108.10 and 50 paisa for selling at Rs 109.50.
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