May 6, 2002	Monday	Safar 22, 1423

THE INTER-BANK forex market witnessed fresh dollar buying by local and foreign banks on the opening day of the week. The rupee was seen weakening on April 29, shedding 2 paisa against the dollar trading at Rs60.12 and Rs60.14 on the eve of the Referendum, against the previous weekend level of Rs60.10 and Rs60.12.

Not much activity was seen on April 30, with leading investors in sidelines. However, needy buyers entered the market to cover their immediate requirements ahead of May Day Holiday. Rising demand exerted slight pressure on the rupee which shed 3 paisa over the overnight level and traded at Rs60.15 and Rs60.16 a dollar. When currency trading resumed after remaining suspended for a day on account of Labour Day on may 1, the rupee managed to recover modest ground versus the dollar gaining 5 paisa for buying and 2 paisa for selling amid quiet trading. Corporate demand during the day pushed the rupee down in the inter-bank market.

Trading was restricted due to the MQM strike call. Rupee had touched the low level at Rs60.17 for a short span as dollar selling helped the rupee to recover. The rupee showed a stable trend in the inter-bank market on May 3, when it traded unchanged at Rs60.10 and Rs60.13, amid strong dollar supply position. It had closed the previous week at Rs60.10 and Rs60.12.

Against other major currencies, the rupee at the inter-bank forex counter continued its weakening trend versus the British pound, euro, Danish and Norwegian krones, Swedish krona, Singapore dollar, Japanese yen’ Chinese yuan, Malaysian ringgit, Kuwaiti diner, Saudi and Qatari riyals and the UAE dirham. However, it managed to show its strength over the Canadian, Australian and New Zealand dollars and Swiss franc. It remained unchanged against the Hong Kong dollar.

In kerb trading, dullness prevailed in the market, where the rupee managed to hold ground versus the dollar showing no change in the parity during the week. Major demand for dollar remained absent. The rupee opened the week at previous weekend level of Rs60.30 and Rs60.40. Trading remained almost suspended on May 1 and May 2 on account of Labour Day and strike while not much activity was noticed earlier on April 29 and April 30, on account of referendum. It did not show any change on May 3, due to comfortable dollar supply position, and ended the week at Rs60.30 and Rs60.40 against the dollar.

Leading currency analysts speculate weakening of rupee in coming days. Currently the parity is range bound. Likely pick up in business activity is expected to exert pressure on the rupee. Over the past twelve months, the rupee has appreciated by nearly 6 percent in the open market. It also appreciated by 2 percent in the inter-bank market. The dollar was trading at Rs61.28 in the inter-bank market and at Rs63.90 in the open market on May 3, 2001.

In the international market, the pound hit 5-1/2 month highs against the dollar on April 29 in London, rising at one point to $1.4635, in a move attributed to the general drift lower in the greenback against a range of major currencies. The dollar’s slide against the euro may be welcomed by British Prime Minister Tony Blair if it continues to push the single currency up against sterling, making British euro-zone entry that much easier. The pound was trading at $1.4590 and at 61.85 pence per euro. The dollar had knocked back on April 26 by mixed data on the state of the US economic recovery. The dollar was holding just above the session’s low of- $0.9045 per euro’ a level last seen in the wake of January’s “europhoria” rally when single currency notes and coins were introduced. The greenback also dipped to ].6175 Swiss francs earlier in the European session but struggled back to stand at 1.6200, just a third of a percent down from levels late in New York. Against the pound it broke $1.46 tested lows not seen since early November.

But it staged a comeback from a seven-week low of 127.85 yen set at the tail-end of holiday thinned Asian trade to stabilise around 128.00. However, the greenback fell to its lowest level since December on the FINEX trade-weighted index. Japan was closed for the Green Day holiday making Asian trading thin. Dealers said the Japanese currency was backed by strong performance of Japanese equities in recent sessions, compared with Wall Street where profit worries have kept stocks depressed. The dollar toiled around multi-month lows against the euro and the yen in on April 29 Asian trade as thin volumes. The dollar has been pressured in recent days as concerns have grown that second quarter US growth will not be as strong as the first.

The greenback took a hiding after a fall in consumer sentiment clouded prospects for a strong recovery even after better-than-expected first quarter growth discouraging players to take fresh aggressive positions in a market already short of dollars. The dollar fought back on April 30, rising from 3-1/2 month lows against the euro and 1-1/2 month troughs versus the yen as dealers squared up ahead of the US consumer confidence data due later in the session. Japanese Finance Ministry official Zembei Mizoguchi gave the dollar a small boost in Asia by saying yen appreciation was in appropriate but dealers said overall dollar sentiment remained negative as investors scaled back US recovery expectations. The greenback stood at $0.9005 per euro, off 3-1/2 month lows of $0.9045 set on April 29 and helped by US investment bank sales of euros against sterling at around 62 pence per euro. It also fetched 128.51 yen, nearly a full yen higher than previous day’s 1-1/2 month low 127.55.

In Tokyo the dollar limped against -the yen due to the verbal aid of a senior Japanese Finance Ministry official who repeated his uneasiness over the yen’s rise. Trade was subdued in a holiday- shortened week, but the dollar continued to struggle on the notion a recovery in the US economy would prove slower than previously expected. The market was growing tired of the oft-recycled line and the dollar only mustered to 1.2X.35 yen before fading back to 127.99 in Asia, which compared with 12X.00 in late New York. It had dipped to seven-week lows of 1.27.65 offshore. Against the yen, it trailed at 115.56 from 115.6X in late New York trade.

The dollar was kept on the defensive against most major currencies with the market looking ahead to a fresh set of US economic data this week including those for consumer confidence payrolls and manufacturing. The dollar held most of its overnight gains against the yen in Tokyo on May 1 with dealers cautious ahead of currency policy testimony by US Treasury Secretary Paul O-Neill later in the day. The dollar recovered to as high as 1.2X.68 yen as dealers took the remark as a timely excuse for dollar short-covering after its bounce back offshore on the back of a rally tin Wall Street. The market took comfort- after US stocks snapped their longest losing streak in 19 months following as smaller- than-expected decline in US consumer confidence and a report showing manufacturing activity in the US Midwest expanded in April. Having moved in a tight band of 1.28.38 to 128.68 yen, the doll