THE RUPEE: bearish sentiment

Bears dominated on the money market during the week ended on October 3, 2009 as rising demand for dollars made the rupee unable to stand firm against greenback. On the interbank market, the rupee shed 19 paisa versus US currency. On the open market, the rupee dropped 10 paisa in relation to dollar for buying and selling at 83.00 and 83.10.
It was observed that the rupee failed to make any recovery against dollar due to higher demand. The import bills are becoming costlier day by day and it seems that the rupee may face hard days, and lose its value further.
According to the State Bank of Pakistan (SBP), the country's foreign exchange reserves rose to 14.49 billion dollars in the week ended on September 26.
INTER-BANK RATES: On Monday, the rupee improved with a rise of 4 paisa for buying at 83.00 and 3 paisa for selling at 83.05.
On Tuesday, the rupee gave up its firmness, losing 15 paisa against US currency for buying and selling at 83.15 and 83.20. On Wednesday, the rupee managed to recover 5 paisa versus US currency for buying and selling at 83.10 and 83.15. On Thursday, the rupee retained its overnight levels against US currency for buying and selling at 83.10 and 83.15.
On Friday, the rupee shed 5 paisa versus the US currency for buying and selling at 83.15 and 83.20. At the week-end, the rupee lost 8 paisa against dollar for buying and selling at 83.23 and 83.28.
OVERSEAS OUTLOOK FOR DOLLAR: Amid first Asian trading, the US dollar fell to its lowest in eight months against the yen, as investors unwound short yen positions and as expectations that Japan will intervene at these levels receded.
The dollar dropped to as low as 88.23 yen, its weakest since late January when it hit a 13-year low of 87.10 yen. In the second Asian trade, the dollar rose against the yen as its rebound from an eight-month low prompted investors to trim short positions and after Japan's finance minister said intervention was possible in extreme cases.
After backtracking on Monday from remarks suggesting he was comfortable with recent yen strength, Finance Minister Hirohisa Fujii spoke again, saying he would not rule out taking action if currency moves were irregular but that not promoting a weak currency was the correct policy.
In the third Asian trade, the dollar slipped against yen on Wednesday towards an eight-month low marked earlier this week as Japanese exporters sold the US currency to settle business before the quarter ends later in the day.
The dollar's slide was broad with the Australian dollar striking a 13-month peak against the greenback after strong retail sales data added to the case for a rise in interest rates as early as November. In the fourth Asian trade, the dollar was on the defensive, having resumed its downtrend in the previous session as investors shifted funds out of the greenback and chased growth-linked currencies. In the final session, the US dollar held firm against most other major currencies after investors cut short positions and booked profits in higher-yielding currencies ahead of a US payrolls report for September due later in the day.
The yen rose broadly as Tokyo's benchmark share average fell further below the key 10,000 mark, prompting some traders to think Japanese retail investors may become hesitant to take risks and invest overseas.
In the New York market, the US dollar fell against most major currencies after a weaker-than-expected jobs report reinforced expectations US interest rates will stay near zero for some time. The US employers cut 263,000 jobs in September, far more than expected, while the unemployment rate rose to 9.8 percent. The data raised fears the weak labour market could impede the economy's recovery from its worst recession in 70 years.
The dollar can't seem to catch a break these days, and its struggles will likely persist next week now that investors are beginning to fear that a nascent economic recovery in the United States may be fizzling out.
Until recently, bad news in the United States or abroad prompted investors to take money out of assets considered too risky to hold during a world recession - commodities, emerging market stocks, foreign currencies - and park it in dollars.
OPEN MARKET RATES: On September 28, the rupee held the week-end levels versus dollar for buying and selling at 82.90 and 83.00, while it extended gains versus euro, gaining 75 paisa for buying and selling at Rs 120.05 at Rs 120.55.
On September 29, the rupee came under pressure, falling 5 paisa for buying and selling at 82.95 and 83.05. The rupee followed suit versus euro, dropping 15 paisa for buying and selling at Rs 120.20 and Rs 120.70.
On September 30, the rupee continued overnight decline, losing 5 paisa for buying and selling at 83.00 and 83.10. The rupee also fell versus euro, slipping 45 paisa for buying and selling at Rs 120.65 at Rs 121.15. On October 1, the rupee gave up its overnight weakness versus dollar, rising 5 paisa for buying and selling at 82.95 and 83.05.
The rupee also managed to recover 30 paisa in terms of euro for buying and selling at Rs 120.35 and Rs 120.85. On October 2, the rupee did not move to any side against dollar for buying and selling at 82.95 and 83.05, while it gained 30 paisa versus euro for buying and selling at Rs 120.05 and Rs 120.55.
On October 3, the rupee shrugged off its firmness against dollar, losing 5 paisa for buying and selling at 83.00 and 83.10. The rupee followed suit, falling 25 paisa versus euro for buying and selling at Rs 120.30 and Rs 120.80.