The rupee, after the clarification about SBP governor's interview, managed to shed some losses against dollar on the currency market during the week, ended on June 2, 2012. In the interbank dealings the rupee lost 1.50 versus dollar for buying at 93.75 and it dropped by Rs 1.55 for selling at 93.85.
In the open market the rupee depreciated by 90 paisa in terms of the dollar for buying at 94.10 and lost Re.1 for selling a 94.40. Versus euro the rupee posted slight gain of 30 paisa for buying and selling at Rs 116.50 and Rs 117.50.
Since the week started, the rupee failed to arrest fall versus dollar due to strong dollar demand. Clouds will be cleared, when the currency market re-opens next week, but it looks that the central bank's close watch over the fluctuations of the rupee versus the greenback will help in warding off speculative buying of dollars.
It is hoped that the impact of the statement by the governor of the central bank may not prove short-lived, the rupee is likely to perform at a certain level in relation to the dollar.
The governor said that the decline in our projected reserves will be partially offset by an increase in remittances, which will exceed 13 billion dollars this fiscal year, and additional foreign direct investment (FDI) in the pipeline that includes US company investment in the power sector.
Malik Bostan, president of the Forex Association of Pakistan (FAP) said that the rupee lost over three percent versus dollar during the month due to massive buying of dollars.
I is expected that dollar supply may improve if the Nato supply restarted. Energy crisis and unstable law and order in the country were adding negatively for the depreciation of the rupee in terms of dollar.
Some other leading analysts explaining their views over the federal budget 2012-13, said that there is no relief for the rupee because budget deficit will cause rise in inflation as a result of the rupee's devaluation, the pressure with an inflation of about 12 percent, devalued the local currency, which finally lost its weight against the greenback. It is feared that lack of inflows is causing dearth of dollar, due to deteriorating law and order situation, foreign investment has dried up, imports are on rise and exports are coming down as weak economic condition in the European Union states creating hopelessness hit the most parts of the world. After sharp fall in the rupee's value versus dollar, many experts were of the view that unless corrective measures are not taken to arrest the decline of the national currency, the rupee is likely to begin downward journey.
On the other hand, the world's economic outlook darkened after news that US employment growth slowed sharply, Chinese factory orders barely grew and European manufacturing fell deeper into crisis.
"That (Chinese number) alone could put pressure on commodities," said Stevens, adding the US jobs data shoved many financial markets into a tailspin. "There's nothing nice you could say about the jobs report."
World stocks plunged as fears of a global slump sent investors scurrying for cover.
INTER-BANK MARKET RATES: On Monday the rupee, after depicting firmness, depreciated by 45 paisa versus dollar for buying and selling at 92.25 and 92.30.
On Tuesday the rupee failed to shed its losses versus dollar, losing 65 paisa for buying and selling at 92.90 and 92.95.
On Wednesday the rupee extended its fall against dollar, giving up 20 paisa for buying at 93.10 and slid by 25 paisa for selling at 93.20.
On Thursday the rupee fell sharply against dollar, losing 85 paisa for buying at 93.95 and lost 80 paisa for selling at 94.00.
On Friday the rupee rose by 20 paisa in relation to dollar for buying at 93.75 and gained 15 paisa for selling at 93.85.
OPEN MARKET RATES: On May 28 the rupee shed another 10 paisa versus dollar for buying at 93.20, while, it held its overnight level for selling at 93.40. The rupee did not show any change against euro for buying and selling at Rs 116.80 and Rs 117.80.
On May 29 the rupee followed same pattern in relation to dollar, falling by 30 paisa for buying at 93.50 and lost 40 paisa for selling at 93.80. The rupee fell against euro, losing 50 paisa for buying and selling at Rs 117.30 and Rs 118.30.
On May 30 the rupee did the same in the open market, shedding 20 paisa against dollar for buying at 93.70 and slipped by 10 paisa for selling at 93.90. The rupee, however, gained 50 paisa against euro, for buying and selling at Rs 116.80 and Rs 117.80.
On May 31 the rupee tumbled versus dollar, falling 60 paisa for buying at 94.30 and losing 70 paisa for selling at 94.60. The rupee also inched down by 20 paisa in relation to euro for buying and selling at Rs 117.00 and Rs 118.00. In the evening, the rupee shed its losses versus dollar as it was trading at 93.53 and 93.60 in the interbank market dealings, and in the open market, it was at 94.00 and 94.50 versus dollar.
On June 1 the rupee followed the same pattern against dollar, it gained 20 paisa in terms of dollar for buying and selling at 94.10 and 94.40. The rupee also picked up Re.1 in relation to euro for buying and selling at Rs 116.00 and Rs 117.00.
On June 2 rupee retained overnight levels in relation to dollar for buying and selling at 94.10 and 94.40. The rupee, however, drifted lower versus euro losing 50 paisa for buying and selling at Rs 116.50 and Rs 117.50.
According to the Reuters, in the first Asian trade, euro bounced off two-year lows after Greek conservatives topped opinion polls ahead of another general election, triggering covering of massive short positions on hopes Athens may agree to austerity steps and remain in the euro.
Bangladesh inter bank buy/sell rates for taka against dollar on Monday. 81.91-81.92 (previous 81.90-81.92) Call Money Rates: 9.50-15.00 percent (previous 9.50-15.00 percent).
The yuan closed down slightly against dollar, China's economic growth has slowed more sharply than expected in recent months, putting a downward pressure on the yuan, traders said.
Indian rupee rose for a third successive session, its biggest winning streak against dollar in over two-and-half months, as a recovery in global risk sentiment helped local stocks post strong gains.
The Indian rupee which hit a record low of 56.40 to dollar on Thursday after a string of all-time lows, has since recovered 2.2 percent, helped by a mix of central bank interventions and improved global risk appetite. It rose as much as 55.01 to the dollar at one point on Monday, its highest in nearly a week, but month-end dollar demand from oil importers kept further gains in check, dealers said.
The rupee closed at 55.185/195 per after ending at 55.37/38 on Friday, as per State Bank of India data. Trading volumes were also muted, with Monday being a public holiday in the United States.
According to the Reuters, in the second Asian trade, euro wobbled near a two-year low against dollar as concerns about the cost of shoring up Spain's banking system pushed up its debt yields, offsetting a slight easing in worries about Greece.
The 10-year Spanish bond yield rose to around 6.5 percent, driving the risk premium on its government debt over German Bunds to a euro-era high of 515 basis points, raising fears the euro zone's fourth biggest economy may fall victim to the debt crisis.
Inter bank buy/sell rates for taka against dollar on Tuesday: 81.92-81.94 (previous 81.91-81.92). Call Money Rates: 9.50-15.00 percent (previous 9.50-15.00 percent.
The Indian rupee dropped on Tuesday, snapping a three-day winning streak, as strong dollar demand from oil firms to meet month-end import commitments and a pullback in domestic shares from the day's highs weighed heavily.
The rupee which had hit a record low against dollar on Thursday, appears vulnerable for further falls, especially given fragile global risk sentiment because of the euro zone's woes.
Only after euro breaches $1.2520. The partially convertible rupee closed at 55.67/68 per dollar, 0.9 percent below its close of 55.1850/1950 on Monday.
The dollar was trading versus Malaysian ringgit at 3.1440 per unit and the US currency was at 6.3463 in relation to the Chinese yuan. According to the Reuters: In the third Asian trade euro fell to a two-year low on Wednesday, hurt by worries about Spain's soaring borrowing costs and expectations that more spending may be needed to support its ailing banks.
The 10-year Spanish government bond yield hit a six-month high on Tuesday, and the sell-off in Spanish bonds has driven up their risk premium over safe haven German Bunds to euro-era highs this week. The partially convertible rupee settled at 56.23/24 per dollar, which marked a record closing low, and was not far the all-time low of 56.40 hit on Thursday. The rupee had closed at 55.67/68 close on Tuesday.
The yuan closed weaker against dollar on Wednesday after hitting a year-to-date low in late trading.
Spot yuan touched an intraday low of 6.3591 per dollar about five minutes ahead of the close, its lowest level since mid-December. It hit an intraday high of 6.3522 in early trade and closed at 6.3577, slightly weaker than Tuesday's close of 6.3480.
The People's Bank of China (PBOC) set the yuan's midpoint at 6.3297 against dollar, slightly weaker than Tuesday's 6.3262 but stronger than Tuesday's close, giving a clear signal that it may allow the yuan to depreciate but only at a controlled pace.
Inter bank buy/sell rates for taka against dollar on Wednesday: 81.92-81.94 (previous 81.92-81.94) Call Money Rates: 9.00-15.00 percent (previous 9.00-15.00 percent).
According to the Reuters: In the fourth Asian trade euro was poised for its biggest drop in at least eight months as the increasing likelihood of Spain needing outside assistance to fix its public finance and banking system led to a major escalation in the perennial crisis in the currency bloc.
Spanish government bond yields surged to a six-month high while German bond yields fell to record lows, pushing the spread between the two to a new high and adding stress to markets already frayed by anxiety that Greece may leave the euro zone.
"Things are starting to look ugly. It seems like the market is making Spain its next target after Greece," said Teppei Ino, currency analyst at Bank of Tokyo-Mitsubishi UFJ.
The euro fell to as low as $1.2358, a level last seen in mid-2010, when it had bottomed at $1.1876. It last stood at $1.2388, having dropped 6.4 percent this month, the biggest since September.
Against yen, the common currency fell as low as 97.352 yen, edging near an 11-year low of 97.04 yen hit in January, with many traders now considering a break of that low as highly likely.
Inter bank buy/sell rates for taka against dollar on Thursday: 81.94-81.94 (previous 81.92-81.94) Call Money Rates: 9.25-15.00 percent (previous 9.00-15.00 percent).
The yuan posted its biggest monthly drop on record in May, responding to the continuous strengthening of the US dollar in global markets and a conspicuous slowdown in China's economic growth, traders said. Spot yuan fell 0.18 percent to close at 6.3690 versus the dollar, weakening from Wednesday's close of 6.3577.
According to the Reuters: In the final Asian trade euro hit a two-year low and was seen at risk of falling further in coming weeks, dogged by worries that Spain may need external aid to shore up its struggling banking sector and fix its public finances.
The Indian rupee strengthened on the back of dollar sales by corporates but it still posted a ninth consecutive weekly drop, its worst losing streak since the Lehman crisis. The partially convertible rupee closed at 55.54/55 per dollar, one percent stronger than its Thursday's close of 56.08/09. The unit traded in a broad range of 55.53 to 56.28 during the day.
A slow and steady pace of yuan depreciation would be in line with China's latest moves to boost its growth but avoid excessive stimuli.
Yuan one-year non-deliverable forwards continued to move away from spot prices and ended trading at a spread of around 540 pips (5.4 basis points) weaker than the yuan spot, implying depreciation around 1.5 percent. The offshore yuan (CNH) continued to track the onshore yuan but maintained its trend of trading slightly weaker than the onshore spot, which may be related to tightening liquidity in the CNH market. The supply of offshore yuan continued to contract in April, and has now shrunk for five consecutive months.
According to the Reuters: the dollar fell against euro and yen on Friday after a gloomy US jobs report fuelled talk the Federal Reserve may need to take further monetary easing measures to prop up the fragile economy.
The euro rebounded off a 23-month low against dollar as traders scrambled to cover bets against the euro zone common currency after driving it down seven percent in May.
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