Upward trend was seen in the currency market as the rupee recovered with modest gains against dollar and euro during the week ending on May 5, 2007, money experts said.
In the interbank market, the rupee gained 11 paisa in relation to the dollar for buying at 60.54 and 60.56 amid hectic buying of the US currency by the corporate sector, dealers said.
The rupee performed well in the open market also, gaining three paisa against the dollar for buying at 60.62 and for selling five paisa at 60.70, they said.
The rupee shed it's prevailing weakness against the euro, lgaining 32 paisa for buying and selling at Rs 82.23 and Rs 82.33, dealers said.
Explaining the rupee's performance during the week, they observed that the rupee was strengthened against dollar on the back of high inflow of the US currency.
Besides, it recovered modestly in relation to the euro as dollar shrugged of its vulnerability as a result of the positive US economic data, including job report, dealers said.
In the meantime, some economists observed that the declining trend in the export items was partly because of firmness in the rupee's value in dollar terms. Because of this factor, our products become expensive in the world market as compare to the Indian and Chinese items.
This is not a solo factor, which is pushing country's exports down, quality factor could be also one of the leading reason behind it, they said.
According to a report, the trade deficit to reach 13.9 billion dollars by the end of the current fiscal 2006-07. The business circle is keenly awaiting for the government's decision in this regard and how the central bank deals with this emerging situation, they said. The government is giving several incentives to the textile sector to get better output, but the desired results are in the way.
According to the weekly statement by the State Bank of Pakistan (SBP), the foreign exchange reserves rose by 28 million dollars to a record 13.661 billion dollars in the week ending on April 28, 2007.
Surging foreign investment inflows and higher remittances from overseas Pakistanis pushed the foreign exchange reserves higher during the third quarter of the fiscal year 2006-2007.
According to a news report, the central bank data the country received 3.94 billion dollars as workers' remittances during the first nine months of the 2006/07 fiscal year (July-June), up 22 percent from 3.23 billion dollars received in the year-ago during the same period.
INTER-BANK MARKET RATES: On the week's opening day, the rupee mostly held its weekend levels against the dollar for buying and selling at 60.65 and 60.66, respectively.
On Tuesday, the markets were closed for Labour Day holiday. On Wednesday, the rupee firmly held its past levels in relation to the dollar for buying and selling at 60.64 and 60.66, respectively.
On Thursday, the rupee gained against the dollar two paisa at 60.62 for buying and picked up three paisa for selling at 60.63, they said.
On Friday, the rupee posted fresh gain of three paisa against dollar at 60.59 and 60.60 for buying and selling, dealers said.
On Saturday, the rupee extended its overnight gains, picking up five paisa against dollar at 60.54 and 60.56 in process of trading, they said.
WORLD MARKET SCENARIO: In the first session of the week, the dollar stuck near a record low against the euro. In the second session, the dollar continued its weakness, the euor hit all time highs versus the yen and Swiss francs. During the third session, after facing set back for the several days, the dollar surged to a two-month high against the yen, extending gains in the wake of data that showed US manufacturing expanded at its fastest pace in almost a year.
The Institute for Supply Management said its index of national factory activity rose to 54.7 in April from 50.9 in May, above the median forecast of 51.0 among analysts polled by Reuters.
In the forth session, the trade in Asian markets was subdued, with Japanese financial markets closed for the first of a string of Golden Week holidays on Monday. Many markets in Asia and Europe were also closed for holidays on Tuesday.
In the fifth session, the US dollar was a shade firmer, building on several weeks of gains as firm US economic data was taken as lessening the chance of an interest rate cut from the Federal Reserve.
Meanwhile, the yen languished near recent lows on signs investors were still happy to borrow in yen to buy riskier assets, notably equities. At the weekend, the dollar strengthened against the euro and yen ahead of the jobs report, dealers said.
OPEN MARKET RATES: On April 30, the rupee did not move any side against the dollar for buying and selling at 60.65 and 60.75, respectively.
While, the rupee continued to extend it's slide against the euro, shedding 11 paisa for buying and selling at Rs 82.55 and Rs 82.65, they added. On first of the May, the markets were closed due to Labour Day holiday, they said.
On May 2, the rupee gained 40 paisa against the euro for buying and selling at 82.15 and 82.25 as the markets reopened after one-day closure on account of May Day or Labour day, dealers said.
While, the rupee did not move any side against the dollar for buying and selling at 60.65 and 60.75 in process of trading, dealers said.
On May 3, the rupee did not show any change in relation to the dollar for the third day for buying and selling at 60.65 and 60.75, respectively. Versus the euro, the rupee lost 19 paisa for buying and selling at Rs 82.34 and Rs 82.44, they said.
On May 4, the rupee picked up three paisa against dollar for buying at 60.62 and it also rose by five paisa for selling 60.70, they said. The rupee managed to rise versus the euro, gaining paisa 19 for buying and selling at Rs 82.15 and Rs 82.25, respectively.
On May 5, the rupee held it's overnight levels against the dollar for buying and selling at 60.70 and 60.62, respectively. The rupee, however, lost eight paisa in relation to euro for buying and selling at Rs 82.23 and Rs 82.33, respectively.