December 3, 2001	Monday	Ramazan 17, 1422

IN THE inter-bank forex market,a the rupee failed to hold its weeklong firmness, and opened the week on a negative note. It lost 7 paisa on November 26, in range bound trading.

The dollar was quoted at Rs60.90 and Rs60.95 at close versus previous weekend close of Rs60.83 and Rs60.88. But the trend quickly reversed on November 27, after higher inflows from expatriates returning home. The parity assumed upward trend after slight improvement in dollar supply, with the rupee gaining 2 paisa for buying and 3 paisa for selling over the overnight level to trade at Rs60.88 and Rs60.92. The parity remained stable for three days amid comfortable supply position, and then strengthened further on November 30, as 18 paisa gain for buying and 17 paisa gain for selling helped the rupee extend further firmness over the dollar. Sufficient supply of dollar following increased inflows from the overseas Pakistanis and heavy dollar selling by exporters have led to this situation.

Against other major currencies the rupee continued to show strength at the inter-bank counter versus the Swedish krona, Hong Kong dollar, Chinese yuan, Malaysian ringgit, Kuwaiti dinar, Saudi and Qatari riayals and the UAE dirham. It, however, lost ground versus British pound, Germany market, Euro, Canadian, Australian, New Zealand and Singapore dollars, Swiss, French and Belgian francs, Dutch guilder, Danish and Norwegian krones, Italian lira, Austrian schilling, Japanese yen and Spanish peseta.

However, high demand for dollar persisted in the kerb on November 26. It pushed the rupee down on the opening day of the week, suffering 20 paisa loss over the previous weekend lose. The dollar traded at Rs61.35 and Rs61.55 against the previous weekend level of Rs61.35 and Rs61.55, though dollar supply improved on November 27, but high demand pushed the dollar down further, with the local currency shedding 5 paisa for buying and 10 paisa for selling to trade at Rs61.60 and Rs61.75 as supply continued to improve further on November 28. The investors came under selling pressure and went into sidelines.

The rupee gained 30 paisa on buying and 25 paisa on selling against the dollar, which traded at Rs61.30 and Rs61.50. The parity eased further as lack of buying interest amid sluggish activity on November 29, helped the rupee extend further gains of 10 paisa. It traded at Rs61.20 and Rs61.40 against the dollar. The rupee gained another 5 paisa on November 30, making the dollar to trade at Rs61.20 and Rs61.35, against Rs61.35 and Rs61.55 at previous weekend close.

Rising foreign exchange reserves and increased inflow of remittances from expatiates has made the supply of dollar comfortable. At the sometime investors have gone into sidelines and there is a lack of buying interest. The rupee/dollar parity is likely to show further improvement in coming days, amid fluctuations. Present situation in the market is likely to prevail until end December.

On the international front, the yen was submerged beneath a tide of negative news on November 26 in Tokyo while the dollar remained buoyed by optimism on both the US economy and the Afghan war. The dollar was well positioned at 124.20 yen having hit four-month highs around 124.48 at previous weekend close. Dealers reported some resistance from banks defending knockout options at 124.50 and 125.00 and cautioned that the market was long of dollars having chased it up five full yen in just 10 trading sessions.

The sterling pushed up against the dollar and the euro in London after a new option poll showed only a small minority of the British electorate thank the pound should be replaced by the euro. Last week, the pound took a beating following rumours that the government was planning to mount a campaign to get Britons to agree on joining the euro in a referendum before or around the time of the next election.

The pound was also help by broad dollar weakness. Sterling against the dollar has firmed a bit which is in line with euro/dollar firming. The pound was trading at $1.4165, up half a per cent from the New York close. The sterling was also up against the euro, trading at 62.15 pence. Sterling gains against the dollar had been exaggerated by broader dollar weakness and as a result of hefty losses against the US currency in recent weeks.

On November 27, the yen came under fresh downward pressure in Tokyo and appeared vulnerable in the near term after Japanese finance minister acknowledge that some authorities in Tokyo wanted to drive it lower. The Japanese currency was bearish across the board, slumping to a three-week low of around 109.70 yen per euro and clinged near a four-month low of around 124.40 per dollar as the market increasingly focused on Japan’s weak fundamentals. But stiff dollar sell orders aimed at protecting options as 124.50 yen prevented the greenback from extending gains beyond the key resistance. The market clearly turned more comfortable about selling the yen after his remarks. The dollar was at 124.31/36 yen against previous day’s late US level of 124.05.

The greenback was around the day’s low of 124.00 yen before the Japanese finance minister comment induced sporadic sales throughout the day. The yen weakened elsewhere with technical buying intensifying in the euro after the single currency decisively broke through resistance around 109.20-109.30 yen. It was around the intraday high of 109.63/73 yen in against 109.19. Against the dollar, the euro kept a firm tone at $0.8821/26 versus $0.8803 in late New York on after gaining offshore as dealers took profits ahead of the US consumer confidence and home sales data. But the euro was otherwise stuck in a tight range with dealers expecting a $0.8770-$0.8840 range in the very near term.

Sterling was little changed against the major currencies in London following the British pre-budget report but analysts said the statement’s relatively upbeat tone brightened the pound’s outlook. It was pinned near the day’s highs around $1.4150, almost one percent above four-month lows set last week around $1.4035. It traded around 62.30 pence per euro, more than half a per cent above the previous week’s one-month troughs.

In Tokyo, the dollar was stripped of some of its recent gains on November 28 as a blizzard of news left an overweight market feeling rather exposed. The euro took advantage of the dollar’s rare relapse of touch a two-week high at $0.8866, a gain of 0.25 per cent on New York’s late $0.8832. The dollar unwound to 123.53 yen from 1239.1 in New York and a 124.59 high on November 27.

In London, the sterling powered up against the dollar benefiting from the greenback’s general weakness and the government’s upbeat growth outlook for the UK economy released in the previous session. Sterling had risen half a cent to $1.4205 from $1.4151 in late New York levels on November 27. Against the euro, the pound was at 62.30 pence after briefly firming on a Financial Time report Belgium’s Interbrew had been plotting a bid for London-listed South African Breweries Plc.

In Tokyo, the dollar found itself on the defensive on November 29, as a market stuffed with long positions suffered one of its periodic mood swings on America. The dollar did get a brief filip against the yen. Dealers reported option-related bids under 123.00 but also feared that stop-loss selling could snowball if support in the 122.50/80 area was breached. The euro in turn was relatively firm at $0.8864, having bounced from deep lows around $0.8733 in recent days. Resistance was lined up at $0.8885 but analysts saw scope for a rally to $0.8940 given how short the market still was.

In London, sterling firmed to two-week highs against the dollar as investors continued to worry about the ace and timing of a US economic recovery. The pound rose to two-week highs around $1.4290, before trimming gains to around $1.4245 little changed on the day. Sterling slipped back against a broadly firm euro to trade around 62.45 pence, down about a third of a percent on the day.

In New York on November 29, the dollar in New York rose helped by the US economic reports showing a rise in durable goods orders and new home sales, which helped spark a rally in US stocks. It surged from a one-week low against the Japanese yen to a session high of 123.93 yen before setting back to 123.85 yen, a gain of 0.63 percent on the day. It recovered from a two-week low against the euro, breaching 88.69 cents, a small gain on the day.

At the close of the week on November 30, the dollar clung to offshore gains on the yen in Tokyo but struggled to make fresh headway amid confusion over how the fallout from the Enron Corp debacle would settle on world markets. It held firm, however, and dealers said this was due to expectations that many US firms will have to repatriate funds from overseas to cover their losses on Enron debts. It was quoted at 124.02/03 yen against New York level of 123.83. The euro stood at $0.8870/75 after failing to sustain a bounce to $0.8920 offshore. It was quoted at 109.92/110.00 yen compared with 109.88.

In London, the pound fell to five-week lows against the euro on November 30, as the single currency soared against the dollar after the US gross domestic product in the third quarter was revised down by slightly more than expected. The GDP report sent the euro above $0.8920, which then pushed it up against sterling through 62.60 pence where stop-loss orders were triggered to sell sterling.

It was trading at five-week highs around 62.83 pence per euro, up a full per cent on the day, in line with the single currency’s gains against the dollar. Sterling, meanwhile, was little changed against the dollar around $1.4255.