THE RUPEE: easy trend

The rupee managed to minimise its losses versus dollar during the week ended on October 17, 2010. On the interbank market, the rupee lost 17 paisa against US currency for buying at 86.05 and 18 paisa for selling at 86.10. On the open market, the rupee lost 20 paisa against dollar for buying and selling at 86.00 and 86.20.
The rupee also came under pressure in relation to euro, and shed Rs 1.82 for buying and selling at Rs 120.08 and Rs 120.58.
It was observed that the fall of the rupee was due to higher payments for petroleum products. The rupee could not improve its performance versus dollar despite higher trend in country's remittances. In the last several weeks, the rising remittances had helped the rupee to come out of wood as, according to the State Bank of Pakistan (SBP) spokesman, remittances sent home by overseas Pakistanis had registered a growth of 13.5 percent, to reach 2.646 billion dollars, during the first quarter (July-September) of the current fiscal year.
According to the State Bank of Pakistan (SBP), net foreign investment in the country fell 28.5 percent, to 455.1 million dollars, in the first three months of the fiscal year 2010/11, compared with 636.1 million dollars in the same period of last year. It also showed that out of total foreign investment, foreign direct investment fell 9.5 percent in July and September to 387.4 million dollars from 427.9 million dollars of the same period of last year.
INTER-BANK MARKET RATES: On Monday, the rupee lost 26 paisa against dollar for buying at 86.14 and 25 paisa for selling at 86.17.
On Tuesday, the rupee recovered 9 paisa against dollar for buying at 86.05 and 7 paisa for selling at 86.10.
On Wednesday, the rupee fell sharply against euro but somehow managed to gain versus dollar.
On Thursday, the rupee was higher by 10 paisa against dollar for buying and selling at 85.95 and 86.00.
On Friday, the rupee shed 10 paisa against dollar for buying and selling at 86.05 and 86.10.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian session, the dollar stabilised with risks of a short-term bounce growing despite expectations that the Federal Reserve would have to print money to support the economy and international currency policy disarray.
The dollar fell to a 15-year low of 81.40 yen but later clawed higher. The prospect remained that Japan could come into the market to cap the yen's rise, though for now some dollar bids in thin trading conditions put a floor under the pair.
Spot yuan on Monday ended at its highest closing level against dollar since a landmark revaluation in July 2005, as political pressure on China for a firmer currency was overtaken by renewed weakness in US dollar. Malaysian ringgit was trading at 3.1000 versus dollar. Indian rupee resumed its climb towards 25-month highs, bolstered by firm stocks, stronger regional peers and dollar's weakness against major currencies. Foreign portfolio investment in equities of more than $8 billion since the start of September lifted the rupee 6.3 percent, and traders were betting the rising inflow could strengthen the rupee past 44 to dollar-a level not seen since August 2008. At 10:42 am (0512 GMT), the rupee was at 44.3150/3225, stronger than 44.42/43 of Friday.
In the second session of Asia trade, dollar held its ground on euro and a basket of currencies, showing signs that it might retain gains near-term from a short-covering bounce as players took some short positions off the table.
The euro had struggled to clear $1.40 in the past three sessions, after hitting an eight-month high of $1.4030 previous week, and traders said that automatic sell orders were starting to build just below the current price, down at $1.3830-35.
Indian rupee was available at Rs 44.40 versus dollar, Malaysian ringgit was trading at 3.1060 in terms of US currency, and Chinese yuan was at 6.6730 in relation to the greenback.
Bangladesh interbank buy/sell rates for taka against dollar was 70.15/70.30 (previous 70.26/70.30).
In the third Asian trade, the dollar came under broad selling pressure, with investors emboldened to test key lows against euro, Swiss franc and a basket of currencies as more signs emerged pointing to US policy easing.
The euro looked set for a challenge of $1.40 and its eight-month high at $1.4030 after Federal Reserve minutes the day before had reinforced expectations of more quantitative easing, with a sustained break above the $1.4025-45 area seen as heralding further gains.
But traders were cautious that several currencies' uptrend against dollar, which revisited a record low against Swiss franc, were becoming stretched and the time for consolidation could be near.
Malaysian ringgit was available at 3.0950 versus dollar and Chinese yuan was trading at 6.6678 in terms of the greenback. At 11:36 am (0606 GMT), Indian rupee was at Rs 44.48/49 per dollar, stronger than 44.66/67 of Tuesday.
In the fourth Asian trade, US dollar dropped to its lowest this year against a basket of currencies, driving Australian dollar up near parity as expectations of US easing kept investors piling on bets against the greenback.
Indian rupee was trading at Rs 44.51 versus dollar, Malaysian ringgit was available at 3.0815 in terms of the greenback and China yuan was at 6.6565 in relation to the greenback.
In the final Asian trade, the US dollar steadied as investors trimmed heavily-extended short positions, but players said it was premature to think there had been any sea change.
Indian rupee strengthened to a fresh 25-month high on Friday, buoyed by heavy foreign fund inflows towards share sales this month, but dollar demand by oil companies limited the gains, dealers said. At 11:26 am (0556 GMT), the rupee was at 44.0525/0550 per dollar.
Malaysian ringgit was trading at 3.0850 versus dollar and Malaysian yuan was trading at 6.647 in terms of the greenback.
The good news for dollar was that selling might slow down a bit in the week ahead, perhaps even enough for a mild correction.
The bad news-at least for dollar bulls and developing countries struggling with currency appreciation-was that any dollar gains would be for a brief pause for breath in an otherwise steady march lower.
The most proximate cause of dollar weakness has been US monetary policy, and with the Federal Reserve all but promising to turn on the printing press again before the year is out, that isn't likely to change.
OPEN MARKET RATES: On October 11, the rupee was down by 20 paisa versus dollar for buying and selling at 86.00 and 86.20. The rupee also came under pressure versus euro, shedding 83 paisa for buying and selling at Rs 119.09 and Rs 119.59.
On October 12, the rupee lost 15 paisa versus dollar for buying and selling at 86.15 and 86.35. The rupee, however, rose by 73 paisa versus euro for buying and selling at Rs 118.36 and Rs 118.86.
On October 13, the rupee gained 10 paisa against dollar for buying and selling at 86.05 and 86.25. The rupee, however, depreciated in relation to euro for buying and selling at Rs 119.52 and Rs 120.02.
On October 14, the rupee extended its overnight gains, rising five paisa for buying and selling at 86.00 and 86.20. The rupee lost 65 paisa in relation to the euro for buying and selling at Rs 120.38 and Rs 120.88.
On October 15, the rupee stayed put versus greenback for buying and selling at 86.00 and 86.20, while it gained 30 paisa versus euro for buying and selling at Rs 120.08 and Rs 120.58.