The rupee fell modestly against dollar on the money market during the week ended on September 26, 2009, shortened due to Eid-ul-Fitr holidays. On the interbank market, the rupee lost 4 paisa against dollar for buying at 83.04 and 4 paisa for selling at 83.08.
On the open market the rupee lost 20 paisa for buying and selling at 82.90 and 83.00, the rupee. It lost 15 paisa versus euro for buying and selling at Rs 120.80 and Rs 121.30.
The dollar was in demand by importers to meet the payment bills. So the rupee failed to keep itself firm despite the fact that foreign exchange reserves showed a stable trend due to healthier trend in remittances and loans and grants by the donors and friendly countries.
Weekly statement by the State Bank of Pakistan (SBP) showed that the country's foreign exchange reserves rose to 14.48 billion dollars in the week ended on September 19, compared with 14.36 billion dollars in the previous week.
INTER-BANK MARKET RATES: On Thursday, the rupee posted a gain of 5 paisa in terms of dollar for buying and selling at 82.95 and 83.00.
On Friday, the rupee showed no change against dollar for buying and selling at 82.95 and 83.00. On Saturday, the rupee drifted lower against dollar by 9 paisa for buying at 83.04 and by 8 paisa for selling 83.08.
In New York at the weekend, the US dollar sank to its lowest in more than seven months against yen, weighed down by comments overnight from Japan's Finance Minister Hirohisa Fujii saying he was against deliberately weakening the yen or any other currency.
Traders cited a Kyodo News report saying Fujii told US Treasury Secretary Timothy Geithner in a meeting on Thursday evening he was opposed to manipulating the value of the yen.
OVERSEAS OUTLOOK FOR DOLLARS: In the beginning session of the week, the dollar was mostly lower against the world major currencies. In the fourth Asian session, the dollar softened against higher-yielding currencies as investors shifted their funds away from the greenback on expectations the Federal Reserve will keep interest rate very low for a long time.
The dollar also edged down against the low-yielding yen after it met strong resistance above 91.50 yen, hurt by offers from Japanese exporters who have returned from a three-day holiday in Japan.
In the final session, the dollar slipped after a draft statement showed leaders of the Group of 20 rich and developing nations pledged to sustain emergency measures until the economic recovery becomes solid, encouraging speculators to sell the low-yielding greenback.
A pledge from Group of 20 leaders to bring the global economy back into balance could continue to weigh on the dollar, which has struggled in recent weeks.
Short-term reactions to the G20 meeting in other markets will be muted, but over a longer period of time, bank stocks and energy markets could be hurt by G20 actions. Leaders at the G20 meeting in Pittsburgh signalled their desire to move away from the greenback as the world's reserve currency.
The dollar rose last week, in part because of equity market weakness, but it has fallen 4.3 percent this quarter against a basket of currencies. The dollar's weakness of late has not come because of US economic weakness, but because of emergent recovery around the world. Investors have used the dollar as a funding currency to buy riskier assets around the world.
OPEN MARKET RATES: On September 24, the rupee lost 15 paisa against dollar for buying and selling at 82.85 and 82.95.
The rupee followed same path versus the euro, losing 65 paisa for buying and selling at Rs 121.30 and Rs 121.80. On September 25, the rupee shed 5 paisa versus dollar for buying and selling at 82.90 and 83.00. The rupee, however, managed to gain 38 paisa versus euro for buying at Rs 120.92 and 40 paisa for selling at Rs 121.40.
On September 26, the rupee retained its overnight levels versus dollar for buying and selling at 82.90 and 83.00. It rupee gained 12 paisa in relation to euro for buying at Rs 120.80 and 10 paisa for selling at Rs 121.30.