Upward trend was witnessed in the open market last week as the rupee touched the mark of Rs 59 on smooth supply of dollars, currency experts said, adding the rupee retained its present levels despite rising demand for the US currency.
This positive development in the money market narrowed the difference between the official and open market rates, they observed. The factor will definitely help in discouraging the 'Hundi' business in the market and expatriates would prefer to send their money by the official channels, they said.
In the open market, the rupee gained 35 paisa against the dollar for buying and selling at 59.95 and Rs 60.10, respectively.
It, however, continued its weakness versus the euro, but managed to hold its firmness by trimming its losses for buying and selling at 73.80 and 74.00, dealers said.
The rupee-dollar official parity rates moved in limited range despite rising demand for the greenback, holding at 59.66 and 59.68 for buying and selling, respectively, they added.
Some leading experts said that no respite was seen in the rise of the global oil prices last week and it seems this factor might hurt the firmness of the rupee versus the dollar as a result of accelerating growth, which increased demand for imports.
The whole world is in grip of uncertainties as a result of unpredictable trend in the global oil prices during the week and fears of aftermath negative effects on the other rates of the food and non-food items, analysts said.
They feared that the adverse impact of increasing trend in the oil prices dragging the world towards the unforeseen fears.
Similarly, the business dealings and direction in the currency market is concerned, as most of the experts were of the view that if the upward trend continued in the world oil prices, the demand for the dollar will increase for payments needs, they said.
This is the reason, which were pushing the prices of imported food and non-food items towards the unprecedented rise day by day, analysts said.
They said the sky-rocketing oil prices in the international markets, which touched the new high at 67 dollars per barrel forced the importers to buy dollars from the interbank market to meet the future demand.
Some other experts said that as a result of higher import bills, the prices of essential commodities went up and still on the uphill course and it looks that oil factor might increase prices in the near future.
For the last three months, oil rates are still on the upward side in the overseas markets, experts said.
Besides, not only the prices of food products but all necessary items touching the sky-high in the local market, they said.
Resulting the Sensitive Price Index (SPI) of daily use items registered 8.11 percent increase on August 4 as compared to the corresponding week of the last year, report said.
An official data showed country's current account plunged sharply into deficit in the fiscal 2004-05. Some analysts said that due to high oil prices and accelerating growth, which increased demand for imports.
The current account deficit hit $1.526 billion to June 30, a deterioration of more than $3.3 billion from a $1.811 billion surplus in fiscal 2003-04, central bank figures showed.
Money experts said as far as the direction of the currency market is concerned, it seems the rupee might be in the range-bound trading.
Commenting on the future direction of the forex market, Syed Nabeel Iqbal, Market Manager of the Khanani and Kalia International (KKI), said that on the local ground, the outlook for the rupee is bright on the back of strong remittances and country's firm foreign exchange reserves.
There were clear indications in the trade policy and monetary policy that the rupee is able to maintain a firm trend versus the dollar in the coming days owing to easy supply of dollars, he added.
Additionally, Nabeel Iqbal said that the State Bank of Pakistan (SBP) is fully aware of the development in the currency market and keeping a check over the rupee-dollar fluctuations, which is not allowing any lawlessness or 'Hundi' business in the forex regime.
After the revaluation of the Chinese yuan, the Pak exporters have an edge to attract the overseas buyers, who might prefer to buy Pak goods due to cheaper and better quality.
But the appreciation of the yuan was very light, as market players were expecting some five-six percent appreciation, they said.
If China adjusts its currency upward in the near future between the range of three and four percent, it would greatly boost the Pak exports in the international markets, money experts said.
These factors would definitely help in achieving the 18 billion dollars export target during the current fiscal year, analysts said.
In the world markets, the oil prices shot up and touched the new high at 67 dollars a barrel following a combination of concerns over the Saudi security, the tensions over the Iranian N-programme and refinery problems in the United States. All these negative developments pushing the oil prices up, analysts said.
Despite the Japan's weak current-account surplus June figures, the yen advanced versus the major currencies of the world on rising support for the Japanese government, renewed hopes for economic recovery and robust stocks, currency experts said.
Commenting on the appreciation of the yen, currency analysts observed that robust performance followed a string of bright news from Japan. In fact, the Japanese government and Bank of Japan (BoJ) both upgraded their assessments of the world's second-biggest economy. The emerging optimism about the macro-economy and the stock market now support interest in the yen-dominated assets, they said.
Chinese central bank said that yuan forwards and currency swaps have been cleared for trading on the interbank market, report said, adding this was first time in the history when non-financial institutions will also be allowed to trade in the market.
In the world markets, the dollar tended lower against the euro and yen due to several factors, dealers said. Despite the Japan's weak current-account surplus June figures, the yen advanced versus the major currencies of the world on rising support for the Japanese government, renewed hopes for economic recovery and robust stocks, currency experts said.
According to the market sources, the Federal Open Market Committee (FOMC) might cut interest rates in the its meeting on Tuesday. The dollar slipped against the yen on Tuesday as rising Tokyo stocks and improving economic fundamentals in Japan boosted the Japanese currency.
OPEN MARKET RATES: On Monday, bullish sentiment was seen in the market as the rupee managed to gain 10 paisa against the dollar for buying and selling at 60.30 and 60.40, respectively.
The rupee, however, shed 10 paisa more versus the euro for buying and selling at 73.90 and 74.20, dealers said.
On Tuesday, the rupee extended its overnight gain, picking up 15 paisa on the buying and selling side at 60.15 and 60.25 on easy supply of dollars, dealers said.
The dollar's recovery in the world markets, knocked down the euro in the local market versus the rupee, losing 20 paisa in the morning session at Rs 73.55 and Rs 73.80 for buying and selling respectively, dealers said.
The euro, however, shrugged off its weakness and managed to recover 15 paisa versus the rupee at close at Rs 73.70 and Rs 74.00, respectively.
On Wednesday, the rupee most of the time fluctuated in the narrow range, depicting 10 paisa more gain versus the dollar for buying and selling at 60.10 and 60.20 on falling demand for the US currency, they said.
Versus the euro, the rupee recovered 10 paisa for buying and selling at 73.85 and 74.05, they added.
On Friday, the rupee maintained a firm posture versus the dollar after touching the new high of 59.95 on improving demand for dollars, money experts said.
The rupee recovered more five paisa against the dollar for buying and selling at 59.95 and 60.00, dealers said.
On Saturday, the rupee did not show any change versus the dollar for buying at Rs 59.95 while it shed 10 paisa on the selling side at 60.10, dealers said.
The rupee, however, gained five paisa versus the euro for buying and selling at 73.80 and 74.00, respectively.
INTERBANK RATES: On August 8, bearish sentiment was seen as the corporate demand increased for dollars to meet the heavy overseas payments. The rupee shed three paisa against the US currency for buying and selling at 59.65 and 59.67, dealers said. On August 9, the rupee, on the other hand, continued its fall, shedding two paisa in relation to the dollar for buying and selling at 59.67 and 59.69 due to genuine payments, dealers said.
On August 10, the rupee fluctuated with slight changes in its value against the dollar for buying and selling at Rs 59.68 and 59.69, dealers said. On August 11, the rupee did not show any change versus the dollar for buying and selling.
On August 12, the official rupee-dollar parity rates firmed for buying and selling at 59.67 and 59.68, respectively.
On August 13, the rupee inched up with slight movement for buying and selling at 59.66 and 59.68 amid thin activity, they said.