THE RUPEE: weak trend

An easier trend prevailed on the money market as the rupee fell sharply against the dollar during the week, ended on May 26, 2018, marketment said. In the open market, the rupee dropped nearly Re one in terms of the dollar for buying and selling at Rs 118.20 and Rs 118.70. The national currency, however, gained 30 paisas versus the euro for buying and selling at Rs 137.50 and Rs 139.00.
In the inter-bank market, the rupee was almost unchanged versus the dollar for buying and selling Rs 115.61 and Rs 115.62. Commenting on the rupee's performance during the week, currency experts said that rising demand for dollars, pushed the local currency down sharply. At the same time, the State Bank of Pakistan (SBP) was taking measures to keep a balance between demand and supply. The investors were buying dollars as a safe-haven, it looks that dollars' demand may gain on fresh demand.
Reports showing that the Moody's Investors Service continues to expect solid economic activity, driven by investments related to the China-Pakistan Economic Corridor, while it reaffirmed Pakistan's credit profile as B3 stable.
In the meantime, according to the Business Confidence Index (BCI) survey, the overall business confidence in Pakistan stands at 14 percent positive, a significant decline from 21 percent announced in November 2017.
Under the weak fundamentals, country is facing decline in business activity, on the other hand, country's dependence on imports is increasing instead of decline, exports are on decline due to contamination or several other negative factors, money experts said.
According to the reports, the State Bank of Pakistan (SBP) has decided to increase the policy rate by 50 basis points to 6.50 percent for next two month.
OPEN MARKET RATES: On Monday, the rupee lost 20 paisas in terms of the dollar for buying and selling at Rs 117.20 and Rs 117.70, they said. The national currency also lost 10 paisas versus the euro for buying and selling at Rs 137.80 and Rs 139.30. On Tuesday, the rupee shed 10 paisas in terms of the dollar for buying and selling at Rs 117.30 and Rs 117.80. The national currency also lost 80 paisas versus the euro for buying and selling at Rs 138.50 and Rs 140.000.
On Wednesday, the rupee lost 50 paisas in terms of the dollar for buying and selling at Rs 117.80 and Rs 118.30. The national currency, however, picked up 80 paisas versus the euro for buying and selling at Rs 138.00 and Rs 139.50.
On Thursday, the rupee lost 40 paisas in terms of the dollar for buying and selling at Rs 118.20 and Rs 118.70. The national currency, however, lost 50 paisas versus the euro for buying and selling at Rs 138.50 and Rs 140.00
On Friday, the rupee managed to hold overnight levels in terms of the dollar for buying and selling at Rs 118.20 and Rs 118.70. The national currency, however, picked up 25 paisas versus the euro for buying and selling at Rs 138.25 and Rs 139.75. On Saturday, the rupee did not show any change in terms of the dollar for buying and selling at Rs 118.20 and Rs 118.70. The national currency, however, gained 75 paisas versus the euro for buying and selling at Rs 137.50 and Rs 139.00.
INTER-BANK MARKET RATES: On May 21, the rupee dropped by three paisas in relation to the dollar for buying and selling Rs 115.61 and Rs 115.62. On May 22, the rupee did not move any side in relation to the dollar for buying and selling Rs 115.61 and Rs 115.62. On May 23, the rupee was almost unchanged in relation to the dollar for buying and selling Rs 115.61 and Rs 115.62.
On May 24, the rupee held the almost overnight levels versus the dollar for buying and selling Rs 115.61 and Rs 115.62. On May 25, the rupee was almost unchanged versus the dollar for buying and selling Rs 115.61 and Rs 115.62.
OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, the dollar advanced against the yen on Monday, after US Treasury Secretary Steven Mnuchin said the US trade war with China is "on hold", boosting risk sentiment amid hopes for an easing of trade tensions between the world's two biggest economies.
The dollar rose 0.5 percent to 111.245 yen, hitting a fresh four-month high in Asian trade.
The easing of US-China trade tensions is likely to underpin riskier assets such as equities and bodes well for the dollar against the safe-haven yen, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
Japan is the world's largest creditor nation and traders tend to assume Japanese investors would repatriate funds at times of crisis, thus pushing up the yen. The Japanese currency often weakens when investor confidence increases and their appetite for riskier assets strengthens.
The dollar was trading against the Indian rupee at Rs 68.080, the greenback was available at 3.974 in terms of the Malaysian ringgit and the US currency was at 6.381 in relation to the Chinese yuan. Inter bank buy/sell rates for the taka against the dollar on Monday: 83.70-83.70 (Previous 83.65-83.65).
In the second Asian trade, the dollar traded below a five-month high against a basket of currencies on Tuesday, catching its breath after a broad rally inspired by rising US bond yields and relief at an easing of US-China trade tensions.
The dollar's index against a basket of six major currencies last traded at 93.564, down from a five-month high of 94.058 set on Monday. The greenback's surge to that Monday peak had marked a gain of 5.4 percent in about a month, compared to a mid-April trough of 89.229, which was its lowest since late March.
A pull-back in US 10-year Treasury yields from seven-year highs set last week has probably prompted traders to book some profits on their bullish dollar bets, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.
The dollar was trading against the Indian rupee at Rs 68.010, the greenback was at 3.975 in terms of the Malaysian ringgit and the US currency was available at 6.376 versus the Chinese yuan.
Inter bank buy/sell rates for the taka against the dollar on Tuesday: 83.70-83.70 (Previous 83.70-83.70).
In the third Asian trade, the dollar edged higher versus a basket of currencies on Wednesday, with investors awaiting the minutes of the Federal Reserve's last policy meeting for hints on the pace of further US monetary tightening.
The dollar index, which measures the currency against a basket of six major peers, rose 0.1 percent to 93.681. On Monday, the index set a five-month high of 94.058.
Further weighing on the prices of riskier assets, Trump also said there was a "substantial chance" his summit with North Korean leader Kim Jong Un will not take place as planned on June 12 amid concerns that Kim is resisting giving up his nuclear weapons.
Against the yen, the dollar fell 0.3 percent to 110.53 yen, pulling away from a four-month high of 111.395 yen set on Monday.
The dollar was trading against the Indian rupee at Rs 68.188, the US currency was available at 3.973 in terms of the Malaysian ringgit and the greenback was at 6.374 in relation to the Chinese yuan. Inter bank buy/sell rates for the taka against the dollar on Wednesday: 83.70-83.70 (Previous 83.70-83.70).
In the third Asian trade, the dollar lost momentum on Thursday after the double-whammy of dovish-looking minutes of the Federal Reserve's last policy meeting and the threat by US President Donald Trump of imposing new tariffs on imported cars.
The euro was hampered by concerns over an economic slowdown in the currency bloc and political risks in Italy, staying near a six-month low against the dollar and a nine-month nadir versus the yen.
"The minutes suggested the Fed is not in a hurry to raise interest rates. The US stock markets seem to like that they were not too hawkish," said Ayako Sera, market economist at Sumitomo Mitsui Trust bank.
The dollar was available against the Indian rupee at Rs 68.325, the greenback was trading at 3.981 against the Malaysian ringgit and the US currency was at 6.391 in terms of the Chinese yuan. Inter bank buy/sell rates for the taka against the dollar on Thursday: 83.70-83.70 (Previous 83.70-83.70).
In the fourth Asian trade, the yen stepped back from a two-week high against the dollar on Friday when North Korea said it was open to resolving issues with the United States after President Donald Trump called off a June summit with its leader, Kim Jong Un.
Although the yen and the safe-haven Swiss franc had gained on Thursday in response to heightened worries over global politics, traders were quick to lock in gains ahead of a long weekend in the United States and Britain.
"The risk-off mood eased a bit after North Korea said it's open to talks during early Asian trade," said Shuntaro Ikeshima, chief manager of forex and financial products trading division at Mitsubishi UFJ Trust and Banking Corp.
The dollar was trading against the Indian rupee at Rs 68.245, the US currency was available at 3.983 in terms of the Malaysian ringgit and the greenback was at 6.389 versus the Chinese yuan.
In the final US trade, the dollar rose against a basket of peers on Friday and was on pace to finish the week at its strongest since mid-November, as commodity-linked currencies fell following a slump in oil prices and as political concerns in Italy and Spain hurt the euro.
The dollar index, which measures the greenback against a basket of six currencies, was up 0.44 percent at 94.166, after hitting a high of 94.249, its strongest since mid-November. The index was up 0.6 percent for the week.
Oil prices fell about $2 on Friday as Saudi Arabia and Russia discussed easing supply curbs that have helped push crude prices to their highest since 2014.