The rupee touched a new low level versus dollar at 86.26 during the week ended on October 1, 2010. On the interbank market, the rupee lost 24 paisa against dollar for buying at 86.21, and 25 paisa for selling at 86.26.
On the open market, the rupee lost 45 paisa for buying and selling at 86.40 and 86.60 in relation to dollar, and also drifted lower in terms of euro by Rs 3.36 for buying at Rs 117.92 and by Rs 3.64 for selling at Rs 118.42.
It was observed that there had been some foreign exchange inflows, including remittances sent by overseas Pakistanis and export receipts, but they were not enough to help in strengthening the rupee, and it was likely that it would weaken further.
According to weekly statement by the State Bank of Pakistan (SBP), foreign exchange reserves rose to a record 16.79 billion dollars in the week ending September 24, 2010.
The rupee fall versus dollar was due to growing uncertainties about rate announcement and implementation of RGST ('reformed' general sales tax), whose implementation was postponed for a month. Some leading factors behind the fall of the rupee were uncertain economic and political condition, which most likely propelled the traders for extended buying of dollars. The money market witnessed increased dollar buying as many traders preferred to have dollar stocks to tackle the aftermath impacts and situation resulting from imposition of "reformed general sales tax' (RGST).
The State Bank raised the interest rate from 13 percent to 13.5 percent, and export refinance rate from 8.5 percent to 9 percent to control inflation, which might have negative impact on industrial production and exports. The central bank's move was to discourage inflation. However, prices were still heading for new higher destinations.
In fact, the outcome of the increase in the rate is likely fall in exports, because, under the circumstances, by many countries of the world the rates are being reduced to encourage investment and to promote industrial activities.
If political and economic conditions do not improve, the rupee may face more depreciation. The rupee lost 1.19 percent in its value this year, after a fall of 6.17 percent in 2009.
The rupee also fell against other currencies. Its performance between 1 July 2009 and 27 September 2010 has been as follows: It dropped by 1.88 percent in terms of euro; the rupee gave up 2.15 percent against pound sterling; it shed 17.70 percent versus yen; the rupee shed 16.72 percent versus Canadian dollar; it lost 21.01 percent versus Australian dollar.
Between 1 July 2010-27 September 2010, the rupee shed 0.54 percent versus dollar, 9.65 against euro, 6.16 percent in relation to pound, 5.28 vrsus yen, 3.92 percent versus Canadian dollar, and 13.14 percent against Australian dollar.
INTER-BANK MARKET RATES: On Monday, the rupee lost five paisa versus dollar for buying at 86.02 and seven paisa for selling at 86.08.
On Tuesday, the rupee drifted lower in terms of dollar by 12 paisa for buying at 86.14 and 10 paisa for selling at 86.18.
On Wednesday, the rupee lost six paisa against dollar for buying at 86.20 and seven paisa for selling at 86.25.
On Thursday, the rupee lost eight paisa against dollar for buying at 86.28 and seven paisa for selling at 86.32.
On Friday, the rupee gained 7 paisa against dollar for buying at 86.21 and 6 paisa for selling at 86.26.
OVERSEAS OUTLOOK FOR DOLLAR vs OTHER MAJOR CURRENCY UNITS: In the first Asian trade, the dollar edged up from five-month lows as the euro ran into profit-taking, and it dug in against the yen as intervention jitters lent support.
With the end of Japan's fiscal first half approaching, the dollar was expected by some to see selling pressure against yen, although others said this could be countered by yen sales related to the launch of Japanese mutual funds on Monday.
"Since this is the week when the fiscal half-year comes to an end, I think there will be a decent amount of (dollar) selling," said a senior trader at a major Japanese bank. The Indian rupee breached the 45-per-dollar mark to reach a new four-and-half-month high on Monday, as large foreign investor interest in the domestic stock market amid a clutch of initial public offerings (IPOs) boosted sentiment.
The partially convertible rupee closed at 45.01/02 per dollar after hitting 44.99, which was its highest since May 13, and 0.5 percent firmer than 45.25/26 at close on previous Friday. The Chinese yuan extended a rally even though the central bank lowered its mid-point after nine days of stronger fixings in the face of growing US pressure on Beijing to let the currency rise faster.
Interbank buy/sell rates for taka against dollar on Monday: 69.83/69.90 (previous 69.7950/69.8100); Call Money Rates: 3.75-5.50 percent (previous 3.50-5.50. percent).
In the second Asian trade, the struggling dollar got a reprieve, helped by a report that the Federal Reserve was weighing a more open-ended, smaller-scale bond buying programme compared with 2009.
Soft US stocks encouraged profit-taking in riskier currencies, while a report that the Bank of Japan would consider loosening policy also helped the dollar by hampering the yen.
The yuan ended up slightly versus dollar on Tuesday after China's central bank set a slightly stronger mid-point as dollar hovered near eight-month lows against a basket of currencies.
But the market was turning increasingly mixed over how much Beijing would let its currency appreciate in the face of rising US-Sino tensions, potentially limiting the yuan's upside.
Interbank buy/sell rates for taka against dollar on Tuesday: 69.9350/70.1000 (previous 69.83/69.90); Call Money Rates: 3.60-5.00 percent (previous 3.50-5.50 percent).
Indian rupee was available at Rs 45.01 versus dollar and Malaysian ringgit was trading at 3.0880 in relation to the US currency. In the third Asian trade, the ailing dollar looked vulnerable to further losses against a swathe of currencies as falling Treasury yields and disappointing US data fuelled talk that US policy needed further easing.
Mounting speculation that the Federal Reserve could embark on a second round of quantitative easing (QE), kept the dollar stuck near a five-month low on the euro and a two-year trough against Australian dollar.
The yuan closed up against dollar on Wednesday after hitting a post-revaluation high as the People's Bank of China set a record high mid-point amid lingering pressure from Washington on Beijing to let the yuan climb further.
The yuan closed at 6.6868 versus dollar after touching an intra-day high of 6.6825, its highest level since the Chinese currency's landmark July 2005 revaluation.
Interbank buy/sell rates for taka against the dollar on Wednesday: 70.10/70.33 (previous 69.9350/70.1000), Call Money Rates: 3.60-5.00 percent (previous 3.50-5.00 percent). Malaysian ringgit was trading at 3.083 versus dollar.
The Indian rupee surged 3.4 percent in the September quarter, boosted by robust portfolio investments into Asia's third-largest economy on the back of strong growth fundamentals. The partially convertible rupee closed at 44.94/95 per dollar, after hitting 44.85, its highest since May 10, and half a percent stronger than Tuesday's close of 45.15/16.
Forex and debt markets were closed on Thursday for half-yearly closing of banks' accounts. In the fourth Asian trade, euro extended its losses against both dollar and yen after Ireland's central bank put the price of bailing out Anglo-Irish Bank at 34 billion euros ($46 billion).
The euro initially held steady against dollar after the announcement but then came under pressure. The euro also dropped against yen, with its losses gaining steam after triggering stop-loss offers below 113.50 yen, traders said.
The yuan closed lower against dollar on Thursday, but the Chinese currency in September scored its biggest monthly gain since its landmark revaluation in July 2005.
The People's Bank of China (PBOC) engineered a pullback in the yuan against dollar on Thursday after it had generally allowed the yuan to rise in the month. The move was seen as signalling that Beijing might heed US appeals to let the yuan appreciate but it had a limit to what it could concede. Malaysian ringgit was available at 3.0845 versus dollar and Chinese yuan was trading at 6.6909 in terms of the greenback. In the final Asian trade, euro edged up towards a five-month high on the US dollar and the Australian dollar gained after upbeat Chinese data encouraged a little risk-taking in the higher-yielding currency ahead of US indicators.
The dollar dipped 0.1 percent to 83.47 yen, but stayed above previous day's low at 83.16 yen and last month's 15-year trough below 83.00 that had prompted Japanese authorities to intervene for the first time in six years. Malaysian ringgit was trading at 3.0845 versus dollar and Chinese yuan was available at 6.6909 in terms of the greenback.
Indian rupee rallied to five-month highs, powered by hopes for sustained foreign portfolio investments and a wobbly dollar overseas. At 11:08 am (0538 GMT), the partially convertible rupee was at 44.71/72 per dollar after hitting 44.65, which was its strongest since May 4. Traders were happy to sell dollars for fear that the Federal Reserve would soon pump more money into the economy, and the trend should continue unless data provided solid evidence of an economic renewal.
First among equals woulf be Friday's employment report. The median estimate in a Reuters poll called for a 75,000 gain in private sector jobs in September but no change in overall employment and a rise in the jobless rate to 9.7 percent from 9.6 percent.
OPEN MARKET RATES: On September 27, the rupee shed 20 paisa against dollar for buying at 86.15 and 10 paisa for selling at 86.25. The rupee dropped 45 paisa in relation to euro for buying and selling at Rs 114.73 and Rs 114.23. On September 28, the rupee lost 5 paisa against dollar for buying at 86.20 and 15 paisa for selling at 86.40. However, it gained 23 in terms of euro for buying at Rs 114.50 but lost 77 paisa for selling at Rs 115.00.
On September 29, the rupee shed five paisa against dollar for buying at 86.25 while it did not change for selling at 86.40. The rupee, however, lost Rs 1.57 versus euro for buying and selling at Rs 116.07 and Rs 116.57. On September 30, the rupee slipped five in relation to dollar for buying at 86.30 and 10 paisa for selling at 86.50. The rupee lost 71 paisa in terms of euro for buying and selling at Rs 116.78 and Rs 117.28.
On October 1, the rupee shed 10 paisa against dollar for buying and selling at 86.40 and 86.60. The rupee followed the same pattern in terms of the euro, losing Rs 1.14 for buying and selling at Rs 117.92 and Rs 118.42.
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