THE RUPEE: falling trend

Easy trend was seen on the currency market during the shortened week, ended on December 24, 2010 as all banks were closed on Saturday on account of Quaid-e-Azam's birth anniversary. On the interbank market, range-bound trading was seen as the rupee moved cautiously versus dollar. The rupee shed five paisa against the US currency for buying at 85.79 and six paisa for selling at 85.84.
On the open market, the rupee held the overnight levels against dollar for buying and selling at 85.60 and 85.80, while it gained 50 paisa versus euro for buying and selling at Rs 111.95 and Rs 112.45.
Despite improvement in the inflows, the foreign exchange reserves came down due to year-end payments to clear import bills. It looked that rising trend in exports of textile products and in rice sector would help stabilise foreign exchange reserves which according to the State Bank of Pakistan (SBP) fell to 16.39 billion dollars in the week, ending on December 18 from 16.41 billion dollars of the previous week.
Besides, the rupee may move slightly up in relation to dollar in the coming days and, if remittances improve from the current level, the rupee may show its muscle for the short term.
INTERBANK MARKET RATES: On Monday, the rupee was unchanged against dollar for buying and selling at 85.74 and 85.78. On Tuesday, the rupee inched up two paisa against dollar for buying at 85.72 and three paisa for selling at 85.75.
On Wednesday, the rupee slipped by one paisa against dollar for buying and selling at 85.73 and 85.76.
On Thursday, the rupee lost one paisa against dollar for buying at 85.74 and two paisa for selling at 85.78.
On Friday, the rupee lost five paisa against dollar for buying at 85.79 and six paisa for selling at 85.84.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the euro slid to a two-week low, looking vulnerable to more losses against dollar after breaching chart support the previous day, while the greenback was helped by rising tensions in the Korean Peninsula.
The euro, which was pressured by a five-notch downgrade of Ireland's sovereign credit rating on Friday, was within reach of support at $1.3100-3090, a retracement level and its 200-day moving average.
Till mid-morning, the Indian rupee fell to its lowest level in 3 weeks, weighed down by a weak euro, Asian peers and modestly lower domestic stocks. At 10:41 am, (0511 GMT) it was changing hands at 45.5050/52 per dollar after falling to 45.66. Malaysian ringgit versus dollar was available at 3.1440 and Chinese yuan was trading at 6.6656.
In the second Asian trade, the euro bounced back from a 2-week low on short-covering on, though simmering fears that some euro zone countries and banks could face more borrowing strain.
Comments from a Chinese vice premier that China supports efforts by the EU to calm global markets in the wake of Europe's debt crisis were enough to trigger a short-covering rally in holiday-thin trade.
The euro rose 0.3 percent on the day to $1.3172, extending its rebound from Monday's trough of $1.3094. Malaysian ringgit was available at 3.1345 and Chinese yuan was trading at 6.660 versus the dollar.
The Indian rupee rose as euro bounced back from 2-1/2 week lows, with gains in other Asian currencies as well as domestic shares supporting the local unit. Indian rupee was at Rs 45.25 versus the greenback.
During the third Asian trade, the euro won a reprieve after plumbing new lows on the Swiss franc and Australian dollar but the single currency was seen stuck in a slow descent as a steady drip of grim ratings news erodes confidence in it.
The latest blows came from Moody's, which warned that it might cut Portugal's rating, and Fitch, which said the same about Greece.
"Though one might suppose that the market had become somewhat desensitised to such news, evidence suggests otherwise as periphery-bund spreads widen again and EUR remains under pressure," David Watt, a senior currency strategist at RBC Dominion, said in a note to clients. China's yuan edged higher after the Chinese central bank set a slightly stronger mid-point on Wednesday and as the dollar index eased in global markets. But dealers said the firmer yuan did not signify any shift in policy.
Interbank buy-sell rates for the taka against dollar on Wednesday: 70.68-70.70 (previous 70.65-70.70); Call Money Rates: 25.00-30.00 percent (previous 9.0-35.00 percent).
In the fourth Asian trade, Australian dollar edged above parity against greenback and hit a record high versus euro, with global stocks and commodities at multi-year highs on optimism about global economic growth.
Australian dollar last traded at $1.0001, having risen as high as $1.0011, best since December 14. Range was pretty tight though as markets thinned out ahead of the Christmas break.
The euro's woes continued to dominate currency markets, with the single currency pressured by fears the euro zone debt crisis will rumble on in 2011. The euro fell to an all-time low of A$1.3061, having shed more than 3 percent from last Friday's intra-day high and breached new lows every day during the current week.
Malaysian ringgit gained 0.5 percent against dollar in thin trade on the back of repatriation flows and some dollar offers ahead of the Christmas and New Year holidays. But its gains were limited on importers' dollar demand for settlements. "We could see continued inflows pushing the ringgit towards 3.1000 eventually," a Kuala Lumpur-based dealer said.
Indian rupee was trading at Rs 45.00 versus dollar and Chinese yuan was trading at 6.6416.
Interbank buy/sell rates for the taka against ollar on Thursday: 70.69/70.70 (previous 70.68/70.70); Call Money Rates: 15.00-25.00 percent (previous 9.0-30.00 percent.
In the final session, the euro held its ground after rebounding from a record low against Swiss franc and a three-week low against the dollar, but was expected to come under renewed pressure after market players would return from Christmas break.
Traders said that Thursday's rebound in euro was overdue, particularly against Swiss franc, after heavy buying by hedge funds had helped it hit a series of record lows to the point where technical signals indicated an oversold market.
But little action took place in Asia with volumes drying up heading into the Christmas holidays. US markets were shut on Friday along with many European centres.
The ringgit rose 0.84 percent to as firm as 3.0890 per dollar, the strongest since November 11 after a media report on the possible listing of Petronas Carigali. Yuan rose to close at its highest level against the dollar in six weeks on Friday after the People's Bank of China set a stronger midpoint, continuing an upward crawl for the Chinese currency over the past few days. The yuan may appreciate a little in the near term as the central bank might use the exchange rate to fight potential imported inflation and as it needs to create a favourable environment for President Hu Jintao's visit to the United States in mid-January, traders said. Indian rupee was trading at Rs 45.22 versus the dollar.
OPEN MARKET RATES: On December 20, the rupee dropped by 10 paisa against dollar for buying at 85.70 and five paisa for selling at 85.85. The rupee gained 20 paisa in relation to euro for buying and selling at Rs 112.25 and Rs 112.75.
On December 21, the rupee appreciated by five paisa against dollar for buying at 85.65 while it held the overnight level for selling at 85.85. The rupee gained five paisa in relation to euro for buying and selling at Rs 112.20 and Rs 112.70.
On December 22, the rupee gained five paisa against dollar for buying at 85.60 10 paisa for selling at 85.75. The rupee rose by 15 paisa versus euro for buying and selling at Rs 112.05 and Rs 112.55.
On December 23, the rupee maintained its overnight levels against dollar for buying and selling 85.60 and 85.75. The rupee gained 20 paisa versus euro for buying and selling at Rs 111.75 and Rs 112.25.
On December 24, the rupee maintained its overnight level against dollar for buying at 85.60 while it shed five paisa for selling 85.80. The rupee , shed 20 paisa versus euro for buying and selling at Rs 111.95 and Rs 112.45.