On the back of high inflows, the rupee managed gains versus dollar during the week ended on Friday, February 4, 2011, shortened due to Kashmir Day holiday on February 5. On the interbank market, the rupee rose by 16 paisa against dollar for buying and selling at 85.49 and 85.54.
On the open market, the rupee gaind 35 paisa versus dollar for buying at 85.70 and 30 paisa for selling at 85.90. The rupee also trimmed losses in terms of euro, rising by 65 paisa for buying and selling at Rs 116.15 and Rs 116.65.
In spite of strong demand by importers, the rupee looked ahead because of continued rise in the country's foreign exchange reserves.
According to the State Bank of Pakistan (SBP), the country's foreign exchange reserves rose to a record 17.38 billion dollars in the week ended on January 29, up from 17.30 billion dollars of previous week.
Besides, positive prospects were good for the rupee's firmness and signalling that the rupee may be able to gain strength versus dollar due to surge in the remittances, which will help in supply of the greenback.
INTER-BANK MARKET RATES: On Monday, the rupee shed three paisa against dollar for buying at 85.68 and two paisa for selling at 85.72. On Tuesday, the rupee appreciated by 12 paisa versus dollar for buying at 85.56 and 11 paisa for selling at 85.61. On Wednesday, the rupee picked up six paisa in terms of dollar for buying and selling at 85.50 and 85.55.
On Thursday, the rupee was unchanged against dollar for buying at 85.50, but inched up by one paisa for selling at 85.54.
On Friday, the rupee almost retained its overnight levels against dollar for buying and selling at 85.49 and at 85.54.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the euro steadied against dollar as moves to exit riskier positions tapered off, although market players remained wary of the risk that unrest in Egypt could spread across the Middle East. Australian dollar also pared its earlier losses, supported by renewed gains in commodities.
However, as street protests in Cairo showed no sign of abating, investors remained worried that political upheaval could hit other Arab countries, potentially disrupting oil production and heightening diplomatic tensions in the region.
Interbank buy/sell rates for the taka against the dollar on Monday were 71.15/71.15 (previous 71.15/71.15); Call Money Rates: 3.75-5.75 percent (previous 4.00-6.25 percent. China's yuan closed lower versus dollar and finished the month of January with a fall as activity thinned ahead of the week-long Lunar New Year holiday that would start on Wednesday.
Indian rupee was trading at Rs 45.76 versus dollar, Malaysian Ringgit at 3.0600, and Chinese yuan was at 6.592.
In the second Asian trade, the euro crept back near a two-month high after a jump in euro zone inflation fuelled expectations of a rate hike and as worries about unrest in Egypt abated slightly.
Surprisingly, strong data on factory activity in the US Midwest may also have boosted investor risk appetite, although traders said the market could remain volatile, given that uncertainty remains in the Middle East.
The data fanned hopes that more important economic numbers due later in the week, such as the manufacturing survey later on Tuesday and Friday's payroll data, could solidify hopes for a stronger recovery. China's yuan ended up against dollar but moved below the central bank's record high daily fixing as trading thinned ahead of the week-long Lunar New Year holiday to begin on Wednesday, traders said.
Despite sluggish trade, the People's Bank of China sent a strong signal to the market that the government was determined to let yuan appreciate in the near term by fixing its daily mid-point at a record high of 6.5860 to the dollar.
In the third Asian trade, the dollar marked its lowest level in nearly three months as a string of robust economic data and easing concerns over Egypt took the steam out of safe-haven buying in the currency.
Strong manufacturing numbers from the United States and other countries fuelled optimism on global economic growth, with expectations of loose US monetary policy further encouraging risk-taking.
Indian rupee was trading at Rs 45.76 versus dollar, Malaysian ringgit at 3.0430, and Chinese yuan was 6.5938.
In the fourth Asian trade, the euro paused below a 12-week peak, though hawkish comments from the European Central Bank that the day could give it fresh impetus to test resistance around $1.3950.
The euro could gain even more if Federal Reserve Chairman Ben Bernanke, who is due to speak only a few hours after ECB chief Jean-Claude Trichet, reaffirms that the bank's policy is still focusing on boosting growth.
The euro traded at $1.3805, having slipped on profit-taking after it hit a 12-week high of $1.3862 on Wednesday.
Interbank buy/sell rates for the taka against the dollar on Thursday were 71.15/71.15 (previous 71.14/71.15), and Call Money Rates: 4.00-6.00 percent (previous 4.00-7.00 percent. The rupee was little changed after a weak start as mild gains in domestic shares helped steady the market, but the outlook was tepid with high oil prices spurring demand for dollars. At 10:10 am (0440 GMT) the rupee was at 45.63/64 per dollar, after easing to 45.65 in early trade and little changed from Wednesday's close of 45.62/63.
At the final session in Asia trade, euro was on the defensive after European Central Bank President Jean-Claude Trichet poured cold water on expectations for a near-term rate hike, wrong-footing bulls who had expected more tough talk on inflation. Whether the euro's retreat from a 12-week high would continue now hinges on US job data due later in the day, with a break of support around $1.3535-70 seen as a potential sign of more losses down the road.
Trichet, speaking after the ECB's decision to keep rates at a record low 1 percent on Thursday, said inflation expectations would remain "firmly anchored" and inflationary pressures over the medium to long term "should remain contained".
Indian rupee weakened, tracking choppy domestic shares and euro's drop against dollar, and was expected to move in a narrow band with most Asian markets closed for the Lunar New Year holiday. At 11:10 am (0540 GMT), the rupee was at 45.6425/6500 per dollar, weaker than its 45.60/61 close on Thursday. It was likely to move in 45.60-45.80 band intra-day, dealers said, adding that dollar sales from foreign funds would also weigh.
OPEN MARKET RATES: On January 31, the rupee rose by five paisa against dollar for buying at 86.00 10 paisa for selling at 86.10.
The rupee shed 10 paisa in relation to euro for buying and selling at Rs 116.90 and Rs 117.40.
On February 1 , the rupee posted a gain of 10 paisa against dollar for buying at 85.90 while it did not show any variation for selling at 86.10. The rupee, however, lost 55 paisa in relation to the euro for buying and selling at Rs 117.45 and Rs 117.95.
On February 2, the rupee gained 10 paisa against dollar for buying at 85.80 and 20 paisa for selling at 85.90. The rupee lost 35 paisa versus euro for buying and selling at Rs 117.80 and Rs 118.30.
On February 3, the rupee gained 15 paisa against dollar for buying at 85.65 and 10 paisa for selling at 85.80. The rupee appreciated 20 paisa versus euro for buying and selling at Rs 117.60 and Rs 118.10.
On February 4, the rupee lost five paisa for buying at 85.70 and 10 paisa for selling at 85.90 in relation to dollar. The rupee extended its appreciation in terms of the euro, gaining sharply by Rs 1.45 for buying and selling at Rs 116.15 and Rs 116.65.
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