THE RUPEE: downward trend

Bears dominated the money market as the rupee fell against dollar modestly during the week, ended on February 11, 2012. In the inter-bank, the rupee, somehow managed to resist sharp fall versus dollar, losing 16 paisa for buying and selling at 90.68 and 90.70.
In the open market, the rupee printed the same track, falling 15 paisa in terms of the greenback for buying and selling at 90.65 and 90.85, the rupee also fell versus euro, dropping Rs 1.39 for buying and selling at Rs 118.94 and Rs 119.44.
The rupee drifted lower versus dollar and single European currency in process of trading. Oil and other major payment requirements pushed the dollar demand up, causing marginal fall in the rupee, and may continue the same trend in the coming days. The economy is still out of track and despite the so-called several corrective measures to revive the economy. As a result of disappointing outlook for the economy, the International Monetary Fund (IMF) recently urged the country's economic managers to take practical steps to halt the pace of economy's slow down and slide of the rupee versus dollar as well. But other analysts were of the opinion that economy will take time to rise from the bottom, if the government creates new jobs and try to improve law and order situation as early as possible.
The feature of the week was no change in the policy rate as was expected, the central board of directors of the SBP has decided to keep the policy rate unchanged at 12 percent.
Country's fundamentals are weak, resulting a gradual rise was seen in consumer prices and discouraging unemployment data. Foreign aids are shrinking, besides, restarting of the IMF loan during the current month.
The rupee touched a record low of 91.28 against dollar on January 9, pressured by worries about higher payments for oil imports and the country's overall economic health, especially a weakening current account.
The current account recorded a provisional deficit of 2.154 billion dollars in the first six months of the 2011/12 fiscal year, compared with a surplus of 8 million dollars in the same period last year, according to data from the SBP. The deficit is likely to widen further in coming months because of debt repayments and a lack of external aid.
According to the SBP, Country's foreign exchange reserves fell to 16.69 billion dollars in the week ending February 3, compared with 16.87 billion dollars the previous week. The positive factor is healthier trend in the remittances, as overseas workers sent 7.43 billion dollars in first seven months of the current year.
INTER-BANK MARKET RATES: On Monday, the rupee lost 12 paisa for buying at 90.52 and shed 10 paisa for selling at 90.54. On Tuesday, the rupee was weaker versus dollar, shedding 10 paisa for buying at 90.62 and fell by 11 paisa for selling at 90.65. On Wednesday, the rupee inched up by two paisa in relation to dollar for buying at 90.60 and gained one paisa for selling at 90.64. On Thursday, the rupee gave up overnight winning track in relation to dollar, losing five paisa for buying at 90.65 and falling by six paisa for selling at 90.70. On Friday, the rupee shed three paisa for buying at 90.68 while it did not show any change for selling at 90.70.
OPEN MARKET RATES: On February 6, the rupee continued its fall against dollar, sliding by 10 paisa for buying and selling at 90.50 and 90.70. The rupee, however, gained Rs 1.45 against euro for buying and selling at Rs 117.55 and Rs 118.05. On February 7, the rupee retained its levels versus dollar for buying and selling at 90.50 and 90.70. The rupee, however, lost Rs 1.05 in terms of euro for buying and selling at Rs 118.60 and Rs 119.60. On February 8, the rupee maintained overnight levels for the third day in a row in terms of dollar for buying and selling at 90.50 and 90.70. The rupee extended its losses versus euro, shedding 90 paisa for buying and selling at Rs 119.50 and Rs 120.50. On February 9, the rupee shed 15 paisa against dollar for buying and selling at 90.65 and 90.85. The rupee fell versus euro, shedding 35 paisa for buying at Rs 119.85, it, however, gained 15 paisa for selling at Rs 120.35. On February 10, the rupee managed to retain its overnight levels versus the greenback for buying and selling at 90.65 and 90.85. The rupee gained modestly by 24 paisa in relation to euro buying and selling at Rs 119.61 and Rs 120.11. On February 11, the rupee managed to retain its overnight levels versus the greenback for buying and selling at 90.65 and 90.85. While, the rupee gained 67 paisa in relation to euro for buying and selling at Rs 118.94 and Rs 119.44.
OVERSEAS OUTLOOK FOR DOLLAR VS MAJOR CURRENCIES: According to the Reuters, in the first Asian trade, the Indian rupee ended a four-day winning streak on Monday, reversing early gains that saw it rise to a more than four-and-a-half month high, as dollar demand from local oil refiners and big companies offset a rise in local shares.
The euro took something of a hit on Monday as Greek coalition parties dithered on approving the terms for a new bailout with a deadline just hours away, raising worries the whole rescue scheme could flop.
Inter bank buy/sell rates for taka against dollar on Monday: 84.13-84.34 (previous 84.28-84.40) Call Money Rates: 20.00 percent (previous 14.00-20.00 percent).
Yuan appreciation expectations rebounded in January to their strongest point since mid-September and remain near a four-month high, even as spot yuan softened slightly on Monday.
In the second Asian trade, the euro nudged lower in Asia, though most traders clung to hopes Greece would finally clinch a rescue package despite its politicians postponing a decision to accept painful terms by yet another day.
The dollar was available against the Indian rupee at Rs 48.92, the greenback was trading versus the Malaysian ringgit at 3.0100 and was at 6.3062 in terms of the Chinese yuan.
Inter bank buy/sell rates for taka against dollar on Tuesday: 84.05-84.25 (previous 84.13-84.34). Call Money Rates: 20.00 percent (previous 10.00-20.00 percent).
In the third Asian trade, the euro hit a fresh two-month high versus dollar, supported by hopes that Greece may soon agree to austerity steps needed to secure a second bailout and avoid a disorderly default. The Indian rupee nudged up on Wednesday supported by dollar inflows, but a pick-up in greenback buying by local companies and fears of profit-booking after last month's sharp rally kept the mood jittery. The rupee ended at 49.15/16 to the dollar, marginally up from Tuesday's close of 49.19/20, after moving in a wide 48.9850-49.2550 band, an indication of the fragile sentiment.
Inter bank buy/sell rates for taka against the dollar on Wednesday: 83.95-84.15 (previous 84.05-84.25) Call Money Rates: 15.00-20.00 percent (previous 09.00-20.00 percent). Spot yuan closed at 6.2945 per dollar, 104 pips firmer than Tuesday's close and just 1 pip shy of its strongest close this year, which occurred on the year's first trading day, January 4. The People's Bank of China (PBOC) set a midpoint of 6.3027, also its strongest since January 4. The spot rate had not broken through the 6.30 barrier since January 4.
In the fourth Asian trade, the euro hit a fresh two-month high on views that Greece was inching closer to a bailout deal even though Greek parties stopped short of signing off on austerity measures. The yuan was little changed, as a strong midpoint failed to tempt traders to bet on further appreciation in advance of closely watched trade data due on Friday. The dollar/yuan spot rate ended at 6.2952, 9 pips higher than Wednesday's close. The small rise occurred despite the central bank setting a strong midpoint of 6.3009, 18 pips stronger than Wednesday and the strongest since the first market day of 2012. The dollar in terms of the Indian rupee was trading at Rs 49.33, versus the Malaysian ringgit, it was available at 3.0075 and the greenback was at 6.2945 in terms of the Chinese yuan.Inter bank buy/sell rates for taka against the dollar on Thursday: 83.85-84.05 (previous 83.95-84.15).
Call Money Rates: 15.00-20.00 percent (previous 09.25-20.00 percent.
In the final Asian trader, the euro pulled away from two-month highs against the dollar and the yen as worries over Greece's commitment to debt restructuring lingered even after it clinched a deal on fiscal reforms to secure funding and avoid default. Athens struck a long-awaited agreement on harsh austerity steps necessary for a second international bailout in two years, and a debt swap deal between Greece and its private bond holders was practically finalised. China's yuan briefly touched a record high on Friday after the central bank set the strongest midpoint in advance of a US visit by China's vice president, but the currency closed weaker following an afternoon retreat sparked by weak trade data.
Spot yuan touched a record intra-day high of 6.2884 per dollar on Friday morning - surpassing the previous high of 6.2919 on January 4 - after the People's Bank of China (PBOC) set a midpoint of 6.2937, its strongest ever. It was the second straight midpoint below 6.30, a barrier it had never breached before Thursday. At the weekend, euro skidded after a Greek far-right party leader refused to back a bailout agreement raising fears once again that Greece could face a chaotic default on its debt. The pessimistic tone of the market starkly contrasted with the previous session in which optimism over a Greek deal lifted euro to an eight-week high against dollar, adds Reuters.