THE RUPEE: divergent trends

The rupee moved both ways on the currency market during the week, ended on April 14, 2012. In the Inter-bank dealings, the rupee shed two paisa in relation to dollar for buying and selling at 90.64 and 90.66.
On the open market, the rupee posted fresh gain against the greenback, rising 10 paisa for buying and selling at 91.00 and 91.20. The rupee followed suit versus euro, picking up 18 paisa for buying at Rs 118.62 and it also rose by 68 paisa for selling at Rs 119.12.
General trend in the market was steady as the rupee resisted sharp fall versus dollar in the inter-bank market. According to State Bank of Pakistan (SBP), country's liquid foreign reserves have improved by 17 million dollars to about 16,552 billion dollars on April 6, 2012. Increase in the reserves, helped the rupee to halt depreciation in terms of greenback.
Foreign exchange reserves hit a record 18.31 billion dollars in July last year, boosted by inflows of 411 million dollars, including a 191.9 million dollars loan from the World Bank and a 196.8 million dollars loan from the Asian Development Bank (ADB).
Rising trend in exports and record remittances have also supported country's foreign exchange reserves. The rupee is likely to show slight weakness during the current month (April) due to high payments for oil and other import bills.
Remittances from Pakistanis abroad rose 21.45 percent to 9.73 billion dollars in the first nine months of the 2011-12 fiscal year, compared with 8.02 billion dollars in the same period last year. In March, remittances totalled 1.14 billion dollars.
Reserves have since been drained by debt repayments, including $399 million dollars in the week ending February 24 due on an 8 billion dollars International Monetary Fund (IMF) loan.
According to the Pakistan Bureau of Statistics, Pakistan's trade deficit for the first nine months of the fiscal year 2011-12 (July-June) widened to 16.095 billion dollars, compared with a deficit of 11.289 billion dollars for the same period in the previous year.
Exports fell to 17.190 billion dollars in July-March, from 17.727 billion dollars in the same period the previous year. Imports totaled 33.285 billion dollars, up from 29.016 billion dollars previously. The trade deficit was 1.496 billion dollars in March and 1.428 billion dollars in February.
Country's aims to bring inflation at 9.5 percent in 2012/13 and 8 percent in fiscal year 2013/14, which looks very difficult, if prices not come down in the coming days.
To achieve target, the SBP kept its key policy rate unchanged at 12 percent for two months to rein in inflation and because of weak external accounts.
Average inflation for the first nine months of 2011/12 was 10.79 percent and is expected to be within the government's full-year target of 12 percent, but it remains elevated and is a major concern.
INTER-BANK MARKET RATES: On Monday, the rupee drifted lower versus greenback, shedding seven paisa for buying and selling at 90.62 and 90.64. On Tuesday, the rupee extended its slide in terms of the dollar, losing 11 paisa for buying at 90.73 and it also shed 10 paisa for selling at 90.74. On Wednesday, the rupee gave up slide in terms of dollar, gaining two paisa for buying at 90.71 and it also inched up by one paisa for selling at 90.73. On Thursday, the rupee shed one paisa in relation to the dollar for buying at 90.72 while it did not show any change for selling at 90.73. On Friday, the rupee recovered eight paisa in relation to dollar for buying at 90.64 and it also gained seven paisa for selling at 90.66.
OPEN MARKET RATES: On April 9, the rupee stepped down by 10 paisa against dollar for buying and selling at 91.10 and 91.30. The rupee followed same patterns in terms of euro, losing same amount in relation to euro for buying and selling at Rs 118.80 and Rs 119.80.
On April 10, the rupee retained overnight levels against dollar for buying and selling at 91.10 and 91.30. The rupee followed same patterns in terms of euro, showing no variation against euro for buying and selling at Rs 118.80 and Rs 119.80.
On April 11, the rupee retained last levels against dollar for buying and selling at 91.10 and 91.30. While, the rupee shed 20 paisa in relation to euro for buying and selling at Rs 119.00 and Rs 120.00. On April 12 the rupee managed to keep its obtaining level in terms of dollar for buying at 91.10, it, however, shed 10 paisa for selling at 91.20, while the rupee continued its fall versus euro for buying and selling at Rs 119.30 and Rs 120.30.
On April 13, the rupee maintained its overnight level in terms of dollar for buying at 91.10, it, however, shed five paisa for selling at 91.25, while, the rupee continued its fall, shedding 10 paisa versus euro for buying and selling at Rs 119.40 and Rs 120.40.
On April 14, the rupee picked up 10 paisa in relation to dollar for buying at 91.00 and gained five paisa for selling at 91.20. The rupee managed to recover 78 paisa in terms of euro for buying at Rs 118.62 and rose by Rs 1.28 for selling at Rs 119.12.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, dollar hit a one-month low versus yen, extending losses after last week's lower-than-expected US jobs figures bolstered views the Federal Reserve could yet adopt more monetary easing to support the economy. US job growth slowed to 120,000 jobs last month, the Labour Department said on Friday, the smallest increase since October. The dollar was trading against the Indian rupee at Rs 51.24, versus the Malaysian ringgit the greenback was at 3.0710 and the US currency was available at 6.3071 in terms of the Chinese yuan. Inter bank buy/sell rates for taka against dollar on Monday: 81.79-81.83 (previous 81.83-81.83). Call Money Rates: 07.50-14.50 percent (previous 12.00-14.50 percent.
In the second Asian trade yen inched higher against dollar after the Bank of Japan refrained from more easing, although many thought it would stay under pressure on expectation Tokyo would loosen policy later in April.
The yen was also sold by Japanese importers, traders said, whose purchases of fossil fuels have jumped as all but one of Japan's nuclear reactors have gone off line in the wake of the Fukushima nuclear disaster in March 2011.
The dollar was trading against the Indian rupee at Rs 51.29, versus the Malaysian ringgit, the greenback was at 3.0750 per unit and the US currency was at 6.3122 in terms of the Chinese yuan.
Inter bank buy/sell rates for taka against dollar on Tuesday: 81.80-81.83 (previous 81.79-81.83). Call Money Rates: 07.50-14.00 percent (previous 07.50-14.75 percent.
In the third Asian trade yen hit multi-week highs against major currencies while the risk-sensitive Australian dollar floundered to a three-month low against the US dollar on Wednesday as worries about global growth rose.
A jump in Spanish bond yields exacerbated concerns about the fragility of peripheral euro zone economies in a market already hurt by last week's disappointing US job report and soft reading on Chinese imports.
The dollar was trading against the Indian rupee at Rs 51.49, dollar was available versus the Malaysian ringgit at 3.0645 and the greenback was at 6.3091 in terms of the Chinese yuan.
Inter bank buy/sell rates for taka against dollar on Wednesday: 81.80-81.83 (previous 81.80-81.83). Call Money Rates: 12.50-14.00 percent (previous 07.50-14.75 percent).
In the fourth Asian trade safe-haven yen pulled away from multi-week peaks against major currencies on Thursday after the European Central Bank official hinted at the possibility of more bond-buying, but an upcoming Italian debt sale posed more risks to jittery markets. Inter bank buy/sell rates for taka against dollar on Thursday: 81.81-81.83 (previous 81.80-81.83) Call Money Rates: 08.00-15.00 percent (previous 12.50-15.00 percent).
The Indian rupee fell on Thursday, erasing earlier gains, weighed by dollar demand from local oil refiners and on continued concerns over foreign portfolio flows. The rupee ended at 51.5800-5850 to the dollar compared with Wednesday's close of 51.42-43. The dollar was trading versus the Malaysian ringgit at 3.0645 and it was available at 6.3091 in terms of the Chinese yuan.
In the final Asian session euro and the Australian dollar eased after Chinese growth data disappointed traders positioning for a strong showing, but other Chinese data came mostly in line with, or above expectations, limiting the downside. The markets for major currencies showed no reaction to news that North Korea's much hyped long-range rocket crashed into the sea shortly after launch on Friday.
The dollar was trading against the Indian rupee at Rs 51.38, versus the Malaysian ringgit the greenback was available at 3.0585 and the US currency in terms of the Chinese yuan was at 6.299.
At the week-end, euro fell, sliding for a second straight week against dollar and yen as rising Spanish borrowing costs spooked investors already reluctant to hold the single currency over the weekend.