Rising demand for dollars pushed the rupee down in the currency market amid shortened week, money experts said. Former prime minister and Pakistan People's Party (PPP) Chairperson Benazir Bhutto was assassinated on Thursday and the government announced three-day mourning, they said.
In the interbank market, the rupee ended with 37 paisa loss against the dollar for buying and selling at 61.42 and 61.44, respectively, currency experts said. In the open market, the rupee shed 10 paisa in relation to the dollar for buying and selling at 61.00 and 61.10, they added. The rupee also lost 85 paisa in relation to the euro for buying and selling at 87.95 and 88.05, they said.
Higher demand for dollars pushed the rupee down as it touched the three-year low level at 61.14 and 61.17, they said, adding the dollar supply was tight following the international market closure. Tight supply and strong demand for dollars pushed the rupee value down, but it is expected that the rupee may take a lift from the present levels, money experts said.
According to market sources the rupee tumbled with sharp losses as the importers were busy in clearing the year-end payments to the foreign firms. The dollars were short of demand as most of the world financial markets were closed due to Christmas and New Year holidays, currency analysts said. The rupee touched the day's lows at 61.40 during the day, they observed.
It is most likely that the rupee may not come out of the prevailing weakness versus the dollar, they said. If the supply improves, the rupee may show slight improvement versus the dollar, currency analysts said.
INTERBANK RATE: On Monday, the rupee dropped sharply against the dollar, dipping 28 paisa for buying and selling at 61.05 and 61.07 as most of the commercial centres reopened after four-day closure on account of Eidul Azha, they said. The next day, the market remained closed on account of birth anniversary of Quaid-e-Azam.
On Wednesday, the demand for dollars shot up in the interbank market on Wednesday as the rupee extended its fall, dipping 28 paisa for buying and selling at 61.32 and 61.34, money experts said. On Thursday, the rupee extended its slide against the dollar as the rupee shed more 10 paisa for buying and selling at 61.42 and 61.44, currency experts said.
WORLD MARKET SCENARIO: During the first session of the week, the dollar hovered near a six-week high against the yen after a rise in US stocks last week made some investors less pessimistic about subprime-related problems and encouraged them to go back into risky carry trades.
Trading activity was very light in Asia as Japanese financial markets were closed on Monday for a national holiday and traders in other parts of the region had left for year-end holidays. The yen hovered near a seven-week low against the dollar on Wednesday as signs of a recovery in risk appetite were seen supporting demand for carry trades.
Activity remained light after US and European markets were closed on Tuesday for Christmas and as many markets in Europe will to remain closed on Wednesday. In the world market, the dollar drifted sideways in thin year-end trade on Thursday after sliding overnight against the euro and a basket of major currencies.
Analysts said light volume in post-holiday trade was exaggerating price movements, but some traders said the dollar was starting to look vulnerable again and the currency's broad month-long rebound could be ending. The dollar fell broadly at the weekend was on track for its worst weekly performance in more than a year as recent soft US economic data added to concern about sluggish growth in 2008.
Instability in nuclear-armed Pakistan after Thursday's assassination of opposition leader Benazir Bhutto also kept markets on edge, sparking flows into safe-haven assets such as gold, Treasuries and the Swiss franc and giving investors a chance to take profits on the dollar's December gains.
OPEN MARKET RATES: On December 24, the rupee shed 10 paisa against the dollar for buying and selling at 60.80 and 60.90, they said. The rupee followed the same print against the euro, giving up 15 paisa for buying and selling at 87.10 and 87.20, they said. On December 25, all the commercial centres remained closed on account of 131st birth anniversary of Quaid-e-Azam Mohammad Ali Jinnah.
On December 26, the rupee shed 10 paisa more against the dollar for buying and selling at 60.90 and 61.00, they said. The rupee also lost 20 paisa further in relation to the euro for buying and selling at 87.30 and 87.40, they said. On December 27, the rupee continued its overnight weakness, shedding 10 paisa more against the dollar for buying and selling at 61.00 and 61.10, they said. The rupee also lost 20 paisa further in relation to the euro for buying and selling at 87.95 and 88.05, they said.