The RUPEE: sharp decline

Sharp erosion was witnessed in the value of the rupee versus the dollar on the local market during the week, ended on September 29, 2018. The rupee traded against the dollar for buying and selling at Rs 124.24 and Rs 124.25.
INTER-BANK MARKET RATES: OPEN MARKET RATES: The rupee fell sharply in terms of the dollar for buying and selling at Rs 126.20 and Rs 126.80. The national currency slid, losing steeply in relation to the euro for buying and selling at Rs 146.50 and Rs 148.50.
Marketmen said that despite several efforts by the governments to boost economy, the rupee fell sharply versus the dollar. Higher oil prices have led to a widening trade deficit and presently, the foreign exchange reserves stood at 15.52 billion dollars. The rupee breached the barrier of Rs 127 versus the dollar due to persistent demand for the US currency, it looks that the rupee is marching towards 128 levels, money experts said.
Besides, State Bank of Pakistan (SBP) increased its main interest rate by 100 basis points to 8.5 percent on Saturday, citing rising inflation and economic worries over the large fiscal and current account deficits.
INTER-BANK MARKET RATES: On Monday, the rupee showed no change versus the US currency for buying and selling at Rs 124.24 and Rs 124.25. On Tuesday, the rupee stayed put against the dollar for buying and selling at Rs 124.24 and Rs 124.25.
On Wednesday, the rupee shed one paisa against the dollar for buying and selling at Rs 124.25 and Rs 124.26. On Thursday, the rupee recovered overnight loss of one paisa against the dollar for buying and selling at Rs 124.24 and Rs 124.25. On Friday, the rupee was almost unchanged against the dollar for buying and selling at Rs 124.24 and Rs 124.25.
OPEN MARKET RATES: On September 24, the rupee did not budge any side against the greenback for buying and selling at Rs 125.20 and Rs 125.50. The national currency lost 25 paisas in terms of the euro for buying and selling at Rs 146.75 and Rs 148.25. On September 25, the rupee was inert versus the dollar for buying and selling at Rs 125.20 and Rs 125.50. The national currency continued slide in terms of the euro, losing more 25 paisas for buying and selling at Rs 147.00 and Rs 148.50.
On September 26, the rupee also drifted lower by 10 paisas versus the dollar for buying and selling at Rs 125.30 and Rs 125.60. The national currency held the overnight levels in terms of the euro for buying and selling at Rs 147.00 and Rs 148.50.
On September 27, the rupee, however, lost 10 paisas more versus the dollar for buying and selling at Rs 125.40 and Rs 12570, they said. The national currency gained 70 paisas in terms of the euro for buying and selling at Rs 146.30 and Rs 148.30, they said.
On September 28, the rupee failed to resist more erosion, losing 40 paisas more versus the dollar for buying and selling at Rs 125.80 and Rs 126.10, they said. The national currency, however, gained Re one in terms of the euro for buying and selling at Rs 145.30 and Rs 147.30, they said.
On September 29, the rupee extended overnight falls, dropping 40 paisas more in terms of the dollar for buying and selling at Rs 126.20 and Rs 126.80, they said. The national currency slid, losing sharply in relation to the euro for buying and selling at Rs 146.50 and Rs 148.50, they said.
OVERSEAS OUTLOOK FOR DOLLARS: In the first Asian trade, the safe-haven Japanese yen briefly blipped higher on Monday as investors reacted to news China had cancelled trade talks with the United States just as the latest round of tariffs are set to take effect.
The trade-exposed Australian dollar went the other way, taking an early hit after China also summoned the US ambassador in Beijing and postponed military talks in protest against a US decision to sanction a Chinese military agency.
President Donald Trump's second round of 10 percent tariffs covering $200 billion of Chinese exports come into effect later on Monday.
The euro held at $1.1745, with dealers reporting some relief that German Chancellor Angela Merkel's ruling coalition resolved a dispute over the country's scandal-tainted spymaster on Sunday, ending a threat to the six-month-old government.
The dollar was trading against the Indian rupee at Rs 72.420 and the US currency was available versus the Malaysian ringgit at 4.132. In the second Asian trade, the dollar carved out small gains against the euro and yen on Tuesday as investors looked to policy clues from the US Federal Reserve, which is widely expected to hike rates this week, and as the Sino-US trade dispute kept markets cautious.
The euro edged lower, having hit a 3-1/2-month high in the previous session after European Central Bank chief Mario Draghi expressed confidence in eurozone inflation and wages growth. The Fed begins its two-day policy meeting later on Tuesday at which it is expected to raise interest rates for the eighth time since late 2015. Markets are also betting on another rate hike before year-end, though the outlook for 2019 is less clear.
The dollar was trading against the Indian rupee at Rs 72.815, the greenback was available at 4.133 in terms of the Malaysian ringgit and the US currency was at 6.863 versus the Chinese yuan. In the third Asian session, the dollar kept to tight ranges on Wednesday as investors focused their attention on the Federal Reserve's policy review later in the day as global markets fret over an escalating trade row between the United States and China.
The US currency slipped against the Australian and New Zealand dollars, which were partially underpinned by a survey showing a bounce in New Zealand business sentiment. Global markets have been on edge in the past few months as the heated Sino-US trade dispute stoked uncertainty about the outlook for global growth and broader monetary policy for some developed and emerging market economies.
The Fed will end its two-day policy meeting later on Wednesday at which it is expected to raise interest rates for the eighth time since late 2015. Investors are also counting on another rate hike before year-end, though the outlook for 2019 is less clear.
The dollar index, which measures the greenback against six major currencies, has slipped around 3 percent since mid-August. The dollar was trading against the Indian rupee at Rs 72.595, the greenback was at 4.140 in terms of the Malaysian ringgit and the US currency was available at 6.872 versus the Chinese yuan.
In the fourth Asian trade, the dollar steadied against its peers on Thursday as a brief boost from the latest US Federal Reserve interest rate hike faded, with lower US Treasury yields reducing support for the greenback.
The dollar index against a basket of six major currencies inched up 0.1 percent to 94.293, adding to modest gains made overnight. The greenback was little changed at 112.73 yen, having slipped from a two-month peak of 113.145 brushed on Wednesday. The euro was up 0.1 percent at $1.1750 after declining 0.2 percent the previous day. Long-term US Treasury yields declined following the Fed's tightening, pulling back from four-month highs of 3.11 percent scaled earlier in week, with some investors thought to have wagered the Fed would hint at faster monetary tightening.
The dollar was trading against the Indian rupee at Rs 72.640, the US currency was at 4.138 in terms of the Malaysian ringgit and the greenback was 6.874 in relation to the Chinese yuan. In the final Asian trade, the dollar was in fine fettle against its peers on Friday, advancing to a nine-month high versus the yen, after data reinforced upbeat views about the US economy and backed the Federal Reserve's signal for a steady course of rate increases over the next year.
US gross domestic product grew at a 4.2 percent clip in the second quarter, the fastest in nearly four years, according to government data on Thursday. Another report showed durable goods rose 4.5 percent in August, rebounding from a revised 1.2 percent drop the month before. US President Donald Trump and Japanese Prime Minister Shinzo Abe agreed on Wednesday to start trade talks in an arrangement that, for now, protects Japanese automakers from further tariffs, seen as a major threat to the export-dependent economy.
The dollar index against a basket of six major currencies extended its overnight rally and rose to 95.025, its highest since September 12. The index has gained nearly 0.8 percent this week. The dollar was trading against the Indian rupee at Rs 72.630, the greenback was at 4.138 in terms of the Malaysian ringgit and the US currency was at 6.884 versus the Chinese yuan.
In the final US trade, the dollar climbed to a two-week peak versus a basket of currencies on Friday, boosted by gains against the euro amid concerns about the Italian budget and a US interest rate outlook that reflects multiple rate hikes until 2020.
The US dollar also rose to a nine-month high against the yen. As the third quarter winds down, the dollar index, a gauge of its value against six major currencies, was on track to post its second consecutive quarterly gain of about 0.7 percent. For the last six months, the greenback has advanced nearly 6 percent.
"The US dollar remains a metaphorical rock in a sea of troubles," said Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto. "The growth outlook for other Group of 10 countries and the emerging markets remains uncertain, and increased confidence in the forces compelling the Federal Reserve to hike rates next year is helping to lift the US dollar against its counterparts," he added.