The rupee failed to retain its firmness against both dollar and euro in the currency market during the week ended on November 3, 2007. In the interbank market, the rupee lost eight paisa against dollar at 60.77 and 60.79 for buying and selling, respectively.
In the open market, the rupee shed two paisa in relation to dollar for buying and selling at 60.72 and 60.77, and was down by 60 paisa in terms of euro at 87.80 and Rs 87.90 for buying and selling, respectively. Analysts said that the local currency failed to retain its level as payments were up to the foreign companies.
One factor which is playing a vital role in firmness of the rupee versus dollar has been the State Bank's firm stance to keep it at the present level despite repeated insistence of the textile sector to devalue the rupee, money experts said.
In the annual report of the State Bank of Pakistan (SBP), there was no indication of any depreciation of the rupee as it has already depreciated by 1.14 percent during the current fiscal year.
Foreign exchange reserves by October 27, 2007 went up by 45.5 million dollars to 16.3542 billion dollars, according to the State Bank of Pakistan.
INTER-BANK RATES: On Monday, the dollar was trading at Rs 60.70 and 60.72.
On Tuesday, the rupee moved with slight change against dollar for buying and selling at 60.69 and 60.70. On Wednesday, the rupee was down by three paisa against dollar for buying and selling at 60.72 and 60.73.
On Thursday, the rupee lost two paisa for buying and selling at 60.74 and 60.75, dealer said. On Friday, the rupee lost four paisa against dollar for buying at 60.78 and five paisa for selling at 60.80.
On Saturday, the rupee gained one paisa against dollar for buying and selling at 60.77 and 60.79.
WORKD MARKET SCENARIO: Dollar fell from the strength standard level to 75-76 from 82 in the world. The euro was trading at $1.44 and pound sterling at $2.0575 in the currency market.
In the Asian market, the dollar hovered near record lows against euro and a basket of major currencies on expectations the Federal Reserve will lower interest rates this week and possibly again later this year. In the Asian markets, during the third session, the dollar hovered near a record low against euro on Wednesday as investors expected the Federal Reserve to lower interest rates at its two-day policy meeting ending later in the session.
The Fed moderated expectations for further cuts in short-term rates by saying that inflation risks were equal to the possibility of slower growth, but analysts said it would take upbeat US economic data to help lift the beleaguered dollar.
The Federal Reserve cut US interest rates by a quarter-percentage point on Wednesday to 4.5 percent - a move that followed a more aggressive half-point cut last month - was widely expected. High demand for dollars kept the rupee under pressure and it seems the rupee may lose more ground in the coming days, they said.
Different banks bought nearly 80-90 million dollars to meet the importers' demand. At the weekend, the dollar sank to record lows against the euro and a basket of major currencies at the weekend as fears of major losses at financial firms overshadowed a strong US payrolls report.
OPEN MARKET RATES: On October 29, the rupee held on to its overnight levels against dollar for buying and selling at 60.70 and 60.75, they said. The rupee, however, gained modestly in relation to euro for buying and selling at 87.05 and Rs 87.15, dealers said. On October 30, the rupee did not show any change at the overnight level, dealers said.
On October 31, the rupee shed two paisa in relation to dollar for buying and selling at 60.72 and 60.77, and lost 23 paisa against euro for buying and selling at Rs 87.28 and 87.38 as the US currency continued its weakness in the world market.
On November 1, the rupee did not show any change in relation to dollar for buying at 60.72 while it shed one paisa at 60.78, and lost 27 paisa against euro for buying and selling at Rs 87.55 and Rs 87.65, dealers said.
On November 2, the rupee did not show any change in relation to dollar and euro.
On November 3, the rupee maintained its overnight levels against dollar for the third day in a row, but lost 22 paisa versus euro for buying and selling at Rs 87.80 and Rs 87.90, they said.