March 18, 2002	Monday	Muharram 3, 1423

The rupee/dollar parity remained fluctuated between Rs59.80 and Rs60.50 in the last week. Most experts are of the option that the central bank efforts to protect exporters from suffering losses from weak dollar, are restricting the rupee from any sharp fall.

It has managed to escalate the parity in a narrow range. However, some immediate payment due at the end of the January - March quarter is exerting pressure on the rupee. The rupee is seen losing ground during the week.

Commencing the week on a negative note the rupee shed 9 paisa for buying on March 11, amid rising demand and traded at Rs59.92 and Rs59.95 against the dollar. However, it remained stable at overnight level on March 12, showing no change amid limited demand and dollar selling by exporters.

Low business activity on March 13 helped the rupee gain modest ground in the interbank market, where it was quoted at Rs59.90 and Rs59.93, up 2 paisa over the previous days close. But emerging demand for dollar from banks to cover immediate requirements pushed the rupee down on March 14. However, dollar selling by exporters restricted the decline in rupee which lost 12 paisa for buying and 11 paisa for selling by exporters restricted the decline in rupee which lost 12 paisa for buying and 11 paisa for selling to trade at Rs60.02 and Rs60.04 against the dollar. It lost another 9 paisa on buying and 10 paisa on selling to trade at Rs60.11 and Rs60.14 on March 15, down 19 paisa over the opening day of the week.

Against other major currencies, the rupee at the inter-bank forex counter showed strength over British pound, Canadian, Australian, Hong Kong and Singapore dollars, Japanese yen, Chinese yuan, Malaysian ringgit, Kuwaiti dinar, UAE dirham, Qatari and Saudi riyals. It lost versus Euro, Danish and Norwegian kone, Swedish krona, Swiss franc and New Zealand dollar.

In the kerb, the rupee remained weak and continued to slide on March 11, with demand for dollar slightly higher. It lost 6 paisa on buying and 5 paisa on selling on the first day trading at Rs60.36 and Rs60.45 against the dollar. However, selling by exporters improved dollar supply on March 12, which helped the rupee to gain 15 paisa for buying and 20 paisa for selling. Demand for dollar was also low during day amid sluggish business. The dollar was quoted at Rs60.20 and Rs60.25 at the close on March 12.

Rupee firmness proved short lived as the trend reversed on March 13, when slight increase in demand pushed the rupee down shedding 5 paisa for buying and 10 paisa for selling to trade at Rs60.25 and Rs60.35 versus the dollar. Speculative factor on March 14, was seen exerting pressure on the rupee which lost 15 paisa during the day. The dollar was quoted at Rs60.40 and Rs60.50 at close. However, on March 15, the rupee in the kerb gained 5 paisa to trade at Rs60.35 and Rs60.45, showing no change over the opening day of the week.

The present trend in the rupee/dollar parity is likely to persist till end March. There would be some increase in dollar demand from banks for making quarterly payments.

On the international front, the yen firmed against the dollar in New York on March 11, as talk of Japanese capital repatriation before the end of that country’s fiscal year overshadowed official Japanese warning about the yen’s recent steep rally.

The dollar fell to 127.79 yen in US trading, before cutting some of its losses from the previous New York close to trade at 128.31 yen, a loss of 0.14 per cent on the day. The dollar, however, is 2 yen above last week’s nearly three-month lows at 126.36 yen. The euro also fell, but climbed back to trade at 112.36 yen, a slight gain on the day. Support is seen at 111.90 yen and well above three-month lows at 111.21 yen.

In Tokyo, the yen was tugged lower surrendering some of last week’s hefty gains after a senior Japanese Finance Ministry official waded in with threats of possible intervention. The dollar hopped up as high as 129.10 yen in the morning from an earlier low of 128.18 yen, breaking above last week close rally top of 128.77 and tripping some stop-loss bids. It stepped back at 128.94/99 yen, with near-term resistance seen at 129.50 and support around 128.20 and 127.80. The euro edged up to 112.78/85 yen, around last week close peak at 112.75, from early lows around 112.10.

Sterling was steady in thin trading in London but drew marginal support against the dollar after weaker US equities dented the greenback across the board. It trudged along a narrow path around $1.4208, unchanged from late New York levels on March 8. Against the euro, it stood at 61.57 pence compared with 61.48.

On March 12, the yen fell against the euro and dollar in New York as Japan hammered home concerns over its currency’s recent surge and Tokyo stocks snapped a stunning rally with their largest per centage drop in three months. The dollar was largely steady against European currencies as dealers looked to a key report on US February retail sales and a speech by Federal Reserve Chairman Alan Greenspan for the latest read on the US economy.

The yen slipped 0.42 per cent against the dollar to 128.88 yen from 128.34, and shed 0.44 per cent against the euro to 112.82 from 112.33 at the New York close. The yen’s losses were further augmented as Japanese officials reiterated their concern over the yen’s surge of some eight yen to a three-month high of 126.36 to the dollar last week.

The yen swung lower in Tokyo as Japanese officials chided the market about the pace of its recent rise, but volumes were light and the price action indecisive. There was also intense speculation a Japanese government pension fund would allocate a sizable chunk of its new nine trillion yen ($70 billion) of funds to offshore assets in fiscal 2002. The Government Pension Investment Fund is due to announce the allocation and market chatter is that anything from 500 billion to two trillion could go abroad, with the larger the figure the greater the blow to the yen. The euro was just as erratic, bouncing from 112.00 to 112.95 yen and back again before settling around 112.48 in Tokyo. The single currency was having its usual dreary Asian session against the dollar, staked out at $0.8742 from $0.8750 late in New York.

Sterling lapsed to a one-month low against the dollar in London buffeted by disappointing UK output data and relatively large M&A - related selling. Industrial production and manufacturing output unexpectedly fell in January, dashing hopes of a recovery for Britain’s hard-pressed manufacturing sector. Sterling stood at the day’s lows against the dollar at $1.4094.

On March 13, the dollar’s early gains against the euro and yen were slashed in New York after US retail sales rose less than expected in February, injecting a note of caution into the drumbeat of data pointing to a US economic recovery. The US commerce Department reported retail sales rose 0.3 per cent last month, below Wall Street’s expectations of a 0.9 per cent increase. Excluding the automobile sector, sales rose 0.2 per cent, below a 0.5 per cent forecast by analysts.

The dollar, which rose overnight against the yen as Japan’s benchmark Nikkei share average tumbled for a second straight day, had its gains pared back after the disappointing retails figures. The dollar traded at 129.36 yen, up 0.34 per cent compared with New York close, but below the session high 129.63 yen. The euro reasserted itself against the dollar, climbing to 87.63 cents, a gain of 0.08 per cent and just below the high for the day at 87.70 cents. Just prior to the sales data, the euro was trading near the session low of 87.25 cents. The euro extended its gains against the yen, climbing to a session high 113.36 yen, a rise of 0.43 per cent.

The yen bowed to four-session lows as Tokyo shares slipped, while looming events across the Pacific promised to support the dollar. Late in Tokyo, the dollar was getting closer to the mark with a rise to 129.43 yen from 128.88 in New York. The euro also recouped some ground to 113.13 yen from 112.88 in the US, through traders reported stiff resistance in the 113.20/30 area. The single currency had a quiet session against the dollar, barely budging from $0.8745 after $0.8755 in New York.

Sterling remained steady against the dollar in London recouping earlier losses on the back of a weaker than expected US retail sales report. The data pushed sterling from near one month lows below $1.41, first hit on march 12 to around $1.4135, roughly level with closing levels in New York. But sterling remained soft against the euro, trading around 61.94, down slightly on the day near seven-week lows.

On March 14, in New York the euro shot to seven-week highs above 88.57 cents as doubts about how strong the US recovery will be were heightened by market jitters about possible US military action in Iraq. The euro rose as far as 88.41 cents up more than 0.75 per cent from the previous US close. Dealers said the euro followed the safe-haven Swiss franc, which was up more than a full per cent higher against the dollar on the day, at seven week highs near 1.6550 francs per dollar. The dollar fell as low as 1.6523 francs down more than 1.25 per cent from the previous US close, and to its lowest levels since mid-January.

The yen mustered some gains in Tokyo with sentiment helped by Tokyo stocks’ snapping two straight days of loses. Frustrated by options-related resistance at a session high of 129.57, the dollar slipped to 128.68/70 yen by late Tokyo trade from 129.48 yen in late offshore.