THE RUPEE: all-round gains

All-round gains were seen on the money market during the week ended on May 28, 2011, on easy availability of dollars. On the interbank market, the rupee gained 55 paisa versus dollar for buying and selling at 85.80 and 85.85.
On the open market, the rupee rose by Rs 1.50 in relation to US currency for buying and selling at 85.80 and 86.00. The rupee also recovered Rs 1.31 against euro for buying and selling at Rs 121.20 and Rs 121.70. This was due to the clarification by the finance ministry, which dragged out the rupee from the bottom side. Rising inflows was another factor which helped the rupee to recover its lost ground. However, all eyes were set on rupee's fluctuation before the budget session for 2011-12. Bostan Khan said that the rupee would not move sharply in terms of dollar as the supply of dollar was good due to strong position of foreign exchange reserves.
In fact, higher export proceeds and record inflow of remittances boosted the foreign exchange reserves. Thanks to the higher export proceeds and record remittances, the country's foreign exchange reserves rose to 17.07 billion dollars in the week ending on May 21 from 16.97 billion dollars of previous week, an official of the State Bank of Pakistan (SBP) said.
INTER-BANK MARKET: On Monday, the rupee gained 51 paisa versus US currency for buying at 85.84 and 52 paisa for selling at 85.88.
On Tuesday, the rupee gained 24 paisa versus dollar for buying at 85.60 and 23 paisa for selling at 85.65.
On Wednesday, the rupee shed four paisa in relation to dollar for buying at 85.64 and three paisa for selling at 85.68.
On Thursday, the rupee shed 16 paisa versus dollar for buying at 85.80 and 17 paisa for selling at 85.85.
On Friday, the rupee appreciated by 18 paisa in relation to dollar for buying and selling at 85.62 and 85.67.
On Saturday, the rupee shed 18 paisa for buying and selling at 85.80 and 85.85.
OVERSEAS OUTLOOK FOR DOLLARS: In the first Asian trade, the euro slid to a two-month low against dollar and hit a record low against Swiss franc, hurt by ongoing worries about the potential for debt restructuring by Greece, with market positioning pointing to the chances of a further drop.
The euro came under renewed selling pressure after its fragility was highlighted late in previous week when ratings agency Fitch downgraded Greece and Norway said it was suspending a grant payment to the country.
The euro's drop gained steam after triggering stop-loss selling below 1.24 against Swiss franc. The euro took out an option barrier at 1.2350 francs and hit a record low of 1.2345 francs on trading platform EBS. It was last down 0.4 percent on the day at 1.2378 francs.
Interbank buy/sell rates for the taka against dollar were 73.25/73.34 (previous 73.27/73.29) and Call Money Rates 6.5-12.00 percent (previous 6.5-12.00 percent).
Indian rupee was trading at 44.97 in terms of dollar, Malaysian ringgit at 3.0380 and Chinese yuan was available at 6.4970.
In the second Asian trade, euro hovered above a two-month low against the dollar but was seen capped by worries that euro zone's debt crisis could spread to heavyweights like Spain, that had been considered safe from contagion.
Standard & Poor's cut its outlook for Italy to 'negative' from 'stable' on Saturday, while a crushing defeat for Spain's ruling socialists in local elections raised worries about Prime Minister Jose Luiz Rodrigo Zapatero's ability to meet fiscal targets. Madrid was being seen as an example of fiscal reform.
The yuan ended up against dollar even though the People's Bank of China set a weaker mid-point as the market had priced in a rally in the dollar. "The yuan has fallen a lot yesterday afternoon as the dollar hit a new high; so today's rebound is quite reasonable," said a dealer at a Chinese commercial bank in Shanghai.
Indian rupee was trading at Rs 45.23 versus dollar and Malaysian ringgit was at 3.0550. Interbank buy/sell rates for taka against dollar were 73.25/73.39 (previous 73.25/73.34), and Call Money Rates 8.00-12.00 percent (previous 6.5-12.00 percent.
In the third Asian trade, euro fell, pressured by selling by hedge funds and stop-loss offers as worries over Greece's finances cast a pall over the single currency, bringing it closer to testing crucial support levels on charts.
Speculative selling of euro intensified as rumours swirled about Greece and investors trimmed risky positions, with a drop in US stock index futures and oil adding to pressure on the euro.
Traders cited rumours that Greece might call a snap election and a rumour that Greek Prime Minister George Papandreou might resign as factors that dragged euro lower.
The yuan rose against dollar after People's Bank of China set the mid-point only a pip away from a record high, reflecting its intention to start a new round of appreciation, traders said.
Interbank buy/sell rates for taka against dollar were 73.25/73.39 (previous 73.25/73.39), and Call Money Rates 8.00-12.00 percent (previous 8.00-12.00 percent). Indian rupee was trading at Rs 45.37 versus dollar and Malaysian ringgit was available at 3.065.
In the fourth Asian trade, the euro advanced to a one-week high against dollar as strong commodity prices and a report that China was interested in buying "bailout bonds" for Portugal spurred active stop-loss buying of the single currency.
The market saw sizeable stop-loss euro purchases at $1.4120 and $1.4150, encouraged by a Financial Times article quoting the chief executive of the European Financial Stability Facility as saying that China was "clearly interested" in buying bonds for the Portugal bailout to be issued in mid-June.
A convincing recovery in commodity prices, in which the key US crude oil futures extended gains in Asia to above $101.50, also spurred active broad-based corrective buying of euro in Asian trade.
The euro could revisit $1.42, but lingering uncertainty over debt problems in Greece and other euro zone countries was expected to limit strong follow-through moves.
Indian rupee was available at Rs 45.32 versus dollar, Malaysian ringgit at 3.0420 and Chinese Yuan was at 6.4873.
Interbank buy/sell rates for taka against dollar were 73.35/73.44 (previous 73.25/73.39) and Call Money Rates 6.50-12.00 percent (previous 6.00-12.00) percent.
In the final Asian trade, dollar tumbled broadly after weak US economic data dragged the 10-year Treasury yield down to a six-month low overnight, with the greenback's drop gaining steam on a flurry of stop-loss selling.
The dollar fell across the board, hitting a record low against Swiss franc and a three-year low versus New Zealand dollar, with traders citing talk of dollar selling by model funds and US banks as well as Asian sovereign players.
The dollar also retreated against emerging Asian currencies such as Singapore dollar, and slid 0.6 percent versus a basket of major currencies to 75.107, pulling away from a two-month high of 76.366 hit earlier this week.
The yuan ended little changed against dollar on Friday, even though the People's Bank of China set the mid-point at a record high, as dealers reported large dollar demand from corporate clients. Indian rupee was trading at Rs 45.30 versus dollar and Malaysian ringgit was at 3.0290.
At week-end, the euro rose against dollar, capping off its best week since late April, as European officials said that Greece should be able to shoulder its heavy debt burden without restructuring.
But the safe-haven Swiss franc was the day's top performer, rising to record peaks against both dollar and euro. Traders said the move indicated that investors were still worried about Europe's debt crisis and a divisive US budget debate.
US markets will be closed on Monday for Memorial Day.
The euro pushed above $1.43 for the first time in a week after Greek central bank chief George Provopoulos said the country would repay its debts in full without restructuring if it stuck to a fiscal austerity plan.
French President Nicolas Sarkozy also lent support when he said France opposed a Greek debt restructuring and would defend euro. It last traded at $1.4272, up 1 percent.
OPEN MARKET RATES: On May 23, the rupee picked up Re one in relation to dollar for buying and for selling at 86.30 and 86.50. The rupee also recovered Rs 2.27 versus euro for buying at Rs 120.24 and Rs 2.36 for selling at Rs 120.74.
On May 24, the rupee gained 40 paisa in terms of dollar for buying and selling at 85.90 and 86.10. The rupee, however, lost 40 paisa against euro for buying and selling at Rs 120.64 and Rs 121.14.
On May 25, the rupee recovered 10 paisa in terms of dollar for buying and selling at 85.80 and 86.00. The rupee also gained 36 paisa in relation to euro for buying and selling at Rs 120.28 and Rs 120.78.
On May 26, the rupee was down by 20 paisa in terms of dollar for buying at 86.00 and 30 paisa for selling at 86.30. The rupee also lost Rs 1.42 in relation to euro for buying at Rs 121.70 and Rs 1.52 for selling at Rs 122.30.
On May 27, the rupee recovered 20 paisa versus dollar for buying at 85.80 and 30 paisa for selling at 86.00.
The rupee, however, shed 11 paisa in relation to euro for buying at Rs 121.81 and Re one for selling at Rs 122.31.
On May 28, the rupee retained its overnight levels in relation to dollar for buying and selling at 85.80 and 86.00.
The rupee recovered 61 paisa in terms of euro for buying and selling at Rs 121.20 and Rs 121.70.