The rupee may continue its fall with gradual pace, after hitting record low at 86.01 against dollar on the currency market during the week ended on September 24, 2010. On the interbank market, the rupee lost 25 paisa versus dollar for buying and selling at 85.97 and 86.01.
On the open market, the rupee lost 20 paisa in relation to dollar for buying at 85.95 and 30 paisa for selling at 86.01 due to strong demand for the greenback. The rupee also lost Rs 3.38 in terms of euro for buying and selling at Rs 114.28 and Rs 114.78.
In the absence of smooth supply of dollars, the rupee drifted lower against the US currency and it lookd that the rupee might resist sharp losses in terms of the greenback for the near terms.
It came under observation that that higher demand for dollars and negative indication in the fundamentals pushed the rupee sharply down versus dollar and it is likely that it may set new record low level. The interesting thing is that despite the rise in the value of the dollar, it is still below its actual level during the first quarter of the current fiscal year. Imports are higher than expected and major part of foreign exchange reserves is being spent on payments for oil and other products. The current account deficit was higher by 48 percent during July-August, indicating how much dollar would be in demand in the coming days. The other dominating factor behind the rupee is political instability, which is not able to support.
In the meantime, rising trend in remittances may help the rupee to resist sharp erosion versus dollar. An adding supportive factor, which can support the rupee is higher exports. The country received some 8.9 billion dollars last year and last month (in August 2010) it received 933 million dollars sent by overseas Pakistanis.
According to the State Bank of Pakistan (SBP), foreign exchange reserves rose to 16.63 billion dollars in the week ending on September 17, from 16.07 billion dollars the previous week.
INTER-BANK MARKET RATES: On September 20, the rupee dropped 12 paisa versus dollar for buying at 85.84 and 13 paisa for selling at 85.88. On September 21, the rupee dropped 11 paisa for buying and selling versus dollar at 85.95 and 85.99. On September 22, the rupee gained six paisa against dollar for buying and selling at 85.89 and 85.93.
On September 23, the rupee lost one paisa versus dollar for buying at 85.90 and two paisa for selling at 85.95. On September 24, the increase in dollar buying pushed the rupee to touch the record low level after crossing 86 mark on both open and interbank markets on Friday, dealers said.
The rupee lost seven paisa versus dollar for buying at 85.97 and six paisa for selling at 86.01, they said. Some money experts said that the rupee may touch new low level due to strong demand for dollars to meet the payments.
OVERSEAS OUTLOOK FOR DOLLAR: In the first session, the US dollar edged lower in hesitant Asian trade ahead of a busy week of data and a Federal Reserve meeting where further quantitative easing is likely to be discussed if not implemented.
The Australian dollar was a notable gainer with steady demand lifting it around half a cent through the morning to stand at $0.9411, within striking distance of two-year highs at $0.9469. Indian rupee was trading at Rs 45.83 versus dollar; Malaysian ringgit was available at 3.1035 in terms of US currency; and Chinese yuan was trading at 6.7161 in relation to the greenback.
Interbank buy/sell rates for the taka against the dollar: 69.6600/69.6950 (previous 69.63/69.65); Call Money Rates: 4.75-8.00 percent (previous 4.00-8.50 percent).
In the second Asian trade, the dollar fell towards a five-week low against a basket of currencies, with traders being cautious ahead of a Federal Reserve policy meeting that may discuss the need for further easing.
It struggled at 85.50 yen, supported by fear of Japanese intervention below that level but was unable to rally, while the Australian dollar remained up near a two-year peak.
The Indian rupee was trading at 45.70 versus dollar; Malaysian ringgit was available at 3.1000 in terms of the US currency; and Chinese yuan was trading at 6.7060 in relation to the greenback.
In the third Asian trading, the dollar fell to its lowest against the yen since the day Japan intervened previous week, dropping below 84.97 yen after a Fed statement intensified speculation it would take more quantitative easing steps later this year.
The dollar fell 0.2 percent from late US levels to hit 84.95 yen. It also dropped to its lowest levels in six weeks against euro at $1.3290 per euro and against a basket of currencies.
Interbank buy/sell rates for the taka against dollar on Wednesday; 69.72/69.75 (previous 69.6950/69.7300); Call Money Rates: 4.50-6.75 percent (previous 4.00-7.00 percent). Indian rupee was trading at Rs 45.66 versus dollar; Malaysian ringgit was available at 3.0910 in terms of greenback; and the Chinese yuan was at 6.7060 in relation to US currency.
In the fourth Asian trade, US dollar was on the defensive as speculation that the Federal Reserve would soon start printing more money drove down Treasury yields and kept the greenback pinned near a five-month low on the euro.
But in holiday-thinned Asian trade, one currency faring worse was the New Zealand dollar as data showed the country's economy grew just 0.2 percent last quarter, far below expectations.
Interbank buy/sell rates for the taka against dollar: 69.75/69.7950 (previous 69.72/69.75), Call Money Rates: 4.00-6.00 percent (previous 4.00-6.00 percent).
Indian rupee was trading at Rs 45.66 versus dollar; Malaysian ringgit was at 3.1000 in terms of the US currency and Chinese yuan was available at 6.706 in relation to the greenback.
In the final session, the dollar jumped nearly 1 percent against yen as traders cited talk that Japanese authorities had intervened in the market to stem yen's creeping gains in the past few days.
The dollar's jump came after it had fallen to 84.26 yen on Thursday, its lowest level since Japan intervened last week, and traders said major Japanese banks were bidding up the dollar.
The Indian rupee posted its best weekly gain in three months on Friday and rose to a four-month peak, boosted by robust foreign capital inflows into Asia's third-largest economy on the back of strong growth prospects. The partially convertible rupee closed at 45.25/26 a dollar, after rising to a high of 45.25, its strongest since May 14, and 0.9 percent stronger than Thursday's 45.64/65 close. It traded in a wide band of 45.25 to 45.60 during the session. Malaysian ringgit was trading at 3.0965 versus dollar and Chinese yuan was available at 6.7060 in relation to greenback.
OPEN MARKET RATES: On Monday, the rupee fell by five paisa against dolalr for buying at 85.80 and 10 paisa for selling at 85.95 due to asking demand by buyers. The rupee depreciated in terms of euro, losing 44 paisa for buying and selling at Rs 111.34 and Rs 111.84.
On Tuesday, the rupee retained its overnight levels against dollar for buying and selling at 85.80 and 85.95; while it slipped in relation to euro by 35 paisa for buying and selling at Rs 111.69 and Rs 112.19.
On Wednesday, the rupee shed 10 paisa in terms of dollar for buying at 85.90 and 15 paisa for selling at 86.10. The rupee also slipped in relation to euro, losing Rs 1.48 for buying and selling at Rs 113.17 and Rs 113.67.
On Thursday, the rupee lost five paisa against dollar for buying at 85.95 while it maintained its level for selling at 86.10. The rupee also slipped in relation to euro, losing 24 paisa for buying and selling at Rs 113.41 and Rs 113.91.
On Friday, the rupee retained its overnight level in relation to dollar for buying at 85.95 while it shed five paisa for selling at 86.15. The rupee continued its weakness in terms of euro, losing 47 paisa for buying at Rs 114.28 and 87 paisa for selling at Rs 114.78.
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