Corrective measures helped the rupee to recover some gains against dollar, whereas it losses in terms of euro during the week ended on October 29, 2011. In interbank dealings, the rupee was up by 12 paisa in relation to dollar for buying at 86.58 and 13 paisa for selling at 86.62.
On open market, the rupee posted strong gains versus dollar for buying and selling at 86.70 and 87.00, while it shed 28 paisa in terms of euro for buying and selling at Rs 121.84 and Rs 122.34 respectively.
Some efforts were made by the government and State Bank of Pakistan (SBP) to curb the unrealistic increase in the value of dollar. Hundi and Hawala system caused unprecedented rise in the value of dollar but now concrete measured were made to bring down its value.
However, it appears that the rupee may depict further fall due to rising demand for the greenback in the coming days. Besides, the International Monetary Fund (IMF) expects Pakistan's 2011/12 fiscal deficit to widen to 6.5 percent of gross domestic product (GDP).
The government is targeting a deficit of 4 percent, but many analysts also expect the gap to be much higher. It is likely that inflation may average at 13 percent compared with the government's target of 12 percent.
INTER-BANK MARKET RATES: On Monday, currency rates were not issued due to local holiday.
On Tuesday, the rupee lost 11 paisa in relation to dollar for buying at 86.81 and 9 paisa for selling at 86.84. On Wednesday, the rupee picked up 2 paisa for buying in relation to dollar at 86.79 and on paisa for selling at 86.83.
On Thursday, the rupee rose by 4 paisa in relation to dollar for buying at 86.75 and it 3 paisa for selling at 86.80. On Friday, the rupee rose by 17 paisa in relation to dollar for buying at 86.58 and 18 paisa for selling at 86.62.
OVERSEAS MARKET OUTLOOK FOR DOLLAR: In the first Asian trade, euro held its ground against dollar, with light selling pressure from macro players capping any gains, as markets clung to hopes that EU policymakers were moving towards stemming the region's debt crisis.
The euro was steady at $1.3891 after a summit on Sunday where the EU neared agreement on bank recapitalisation and the use of the European Financial Stability Facility (EFSF) to stave off bond market contagion. But bitter divisions still lingered over the size of the haircut private holders of Greek bonds would have to accept, with a final decision delayed until a second summit on Wednesday.
The dollar versus Indian rupee was available at Rs 49.91, against Malaysian ringgit at 3.1310 and at 6.3753 in terms of Chinese yuan. In the second Asian trade, euro edged lower but still held near a six-week high hit previous day, supported by market expectations for European leaders to come up with broad measures to contain the region's debt crisis at a summit on Wednesday.
European leaders had neared a deal over the weekend on bank recapitalisation, and euro zone officials have said that France and Germany were close to agreement on how to leverage a euro zone rescue fund to stop bond market contagion.
Hopes that euro zone leaders would soon decide on a framework to ease the debt crisis gave a boost to risky assets and the euro over the past couple of days. The dollar was trading against Indian rupee at Rs 49.82, at 3.1260 versus Malaysian ringgint and at 6.3618 in terms of Chinese yuan. Inter bank buy/sell rates for taka against dollar on Tuesday were 76.08-76.13 (previous 75.95-76.10) and Call Money Rates: 6.50-9.25 percent (previous 6.50-10.00 percent).
In the third Asian trade, euro held steady, having lost some gloss after news that a meeting of European finance ministers had been cancelled fuelled fears that any accord from the European Union leaders' summit would disappoint.
Other signs of deep divisions between euro zone members over a wide range of issues including the size of a "haircut" on Greek bonds and how to strengthen the firepower of a bailout fund, also worked to all but dash hopes of a strong summit deal to tackle the region's debt woes.
The yuan closed up slightly versus dollar on Wednesday, with the market remaining cautious amid growing pressure from the United States for China to do more to let its currency strengthen.
Inter bank buy/sell rates for taka against dollar on Wednesday were 76.10-76.16 (previous 76.08-76.13) and Call Money Rates: 6.50-9.00 percent (previous 6.50-10.00 percent).
In the fourth Asian trade, euro hit a seven-week high after EU leaders and banks reached a deal on a 50 percent write-down for private bond holders on their Greek debt, and made progress in other areas crucial to stemming the debt crisis.
The euro jumped 0.6 percent to $1.4000, breaking through a wall of orders and charging past stoploss points on the way, also bolstered by the EU's progress on bank recapitalisation and its move to scale up the size of the euro zone's 440 billion euro ($600 billion) bailout fund, the EFSF.
Inter bank buy/sell rates for taka against dollar on Thursday were 76.15-76.20 (previous 76.10-76.16) and Call Money Rates: 6.50-10.00 percent (previous 6.50-10.00 percent).
In the final Asian trade, euro came off a seven-week peak as investors took a breather after a huge relief rally in riskier assets following a deal on Europe's debt crisis, though investors were eyeing more short-term gains in the currency.
The deal included an agreement that private banks and insurers would accept 50 percent losses on their Greek debt holdings, leveraging of the EU bailout fund and recapitalisation of its banks.
While the agreement is unlikely to solve all Europe's financial problems, the clear signs of progress, combined with healthy US third-quarter GDP, changed the outlook for dollar to strongly bearish and to more upbeat for riskier currencies.
The yuan ended up against dollar on Friday, with the central bank setting a record high mid-point after the dollar index slumped following a European debt deal, which sparked a massive relief rally in risk assets.
The dollar versus Indian rupee was available at Rs 48.89 and against Malaysian ringgit at 3.0770.
At the week-end, euro eased from the seven-week peak after an Italian bond auction showed investors were skeptical about the proposed resolution.
The euro slipped after the auction yield on new 10-year Italian government debt hit a new euro lifetime high. It was the first euro zone bond supply since European leaders struck a deal on anti-crisis measures this week.
The auction highlighted investor scepticism about the euro zone deal, which included an agreement that private banks and insurers accept 50 percent losses on their Greek debt holdings; a leveraging of the euro zone bailout fund and a recapitalisation of banks.
It was observed that the US dollar's thrashing on Thursday after a last-minute European deal to contain the debt crisis may have sealed the currency's fate.
And it was all downhill from there.
The European agreement, which involves a 50 percent write-down of Greek debt and boosting the euro zone's bailout fund to as much as 1 trillion euros, averted a collapse in Europe and spurred a rush to risky currencies and assets once again at the expense of dollar.
Add in to the mix: a suddenly revitalised US economy that a few weeks ago was teetering on the verge of recession and had fuelled speculation about another round of quantitative easing. Almost overnight it leaves a whole new global outlook that appears a little more encouraging.
OPEN MARKET RATES: On October 24, the rupee rate was not issued by the association due to holiday.
On October 25, the rupee retained its level in relation to dollar for buying at 87.80 while it gained 10 paisa for selling at 88.00. The rupee picked up 60 paisa in terms of euro for buying and selling at Rs 120.96 and Rs 121.46.
On October 26, the rupee recovered Re one in terms of dollar for buying and selling at 86.80 and 87.00. The rupee gained 80 paisa versus euro for buying and selling at Rs 120.16 and Rs 120.66.
On October 27, the rupee recovered 20 paisa in terms of dollar for buying at 86.60 while it maintained its selling level at 87.00. The rupee, however, lost 60 paisa in relation to euro for buying and selling at Rs 120.76 and Rs 121.26.
On October 28, the rupee lost 30 paisa for buying versus dollar at 86.90 and 20 paisa for selling at 87.20. The rupee also fell Rs 1.08 in terms of euro for buying and selling at Rs 121.84 and Rs 122.34.
On October 29, the rupee gained 20 paisa versus dollar for buying and selling at 86.70 and 87.00. The rupee gained 30 paisa in terms of euro for buying and selling at Rs 121.54 and Rs 122.04.
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