Rupee remained firm this week in the absence of moving factors Euro slipped 108 paisa on the opening day, while the dollar remained stable in the interbank market and gained 5 paisa in the kerb amid low demand.

In the interbank market the dollar traded in a tight range, throughout the week with the parity fluctuating between Rs59.55 and Rs59.58. Currently the market sentiments are dull and investors have adopted wait and see policy, where as the State Bank of Pakistan has been purchasing dollar from the market to keep the dollar stable and not allowing the dollar to fall further, according to analysts.

In kerb the dollar rate continued to be lower than that of interbank rate, despite 5 paisa gain in dollar over the rupee in the past five days. The parity, however, remained fluctuated between Rs59.40/45 and Rs59.45/55. It did not show any change at the close of the week on August 9.

Euro has continued its downtrend after shedding 108 paisa in a single day trading on August 5, the European currency lost another 125 paisa in the last four days. On August 8, it traded at Rs57.20 and Rs57.40 against the rupee.

It, however, managed to recover from overnight losses and gained 40 paisa on August 9, trading at Rs57.60 and Rs57.80. In rupee term, the value of euro was higher than that of dollar last week but this week it was lower than the dollar by 225 paisa. In the kerb the rupee/dollar parity also continued to be lower than the interbank market rate by 11 paisa.

Against other major currencies, the rupee at the interbank forex counter extended losses versus Canadian and Hong Kong dollars, Chinese yuan, Malaysian ringgit, Swedish krona, Saudi and Qatari riyals, and UAE dirham. It also managed to recover from earlier week’s losses showing strength over the British pound, Japanese yen, Norwegian krone, Singapore and New Zealand dollars and Kuwaiti diner. It extended more gains over Swiss franc and Danish krone

In the international market, the dollar firmed on August 5 as the market looked past weak US service sector data and declining stock prices to focus on how a US slowdown might affect other countries. Since the start of the year, the euro has gained more than 10 per cent against the dollar while the Swiss franc has risen a similar amount. The dollar has fallen more than nine percent against the Japanese yen.

The dollar paid little mind to news the non-manufacturing index of the Institute for Supply management had fallen to 53.1 in July from 57.2 in June, below forecasts for a reading of 54.6. The dollar gained 0.7 percent against the yen to 119.61 yen and 0.9 per cent versus the Swiss franc to 1.4810 francs. The euro fell more than a half percent against the dollar to 98.66 cents.

Sterling fell a quarter percent against the dollar and the euro after data showing a massive fall in British manufacturing output in June pushed back expectations of bank of England interest rate hikes.

It was trading at $1.5659 having hit a low $1.5615 earlier in the day, still more than two cents off its April 2000 high hit last month. It also fetched 63 pence per euro, more than half a penny below two- month highs hit last week.

On August 6, buoyed by surging Wall Street stocks, the dollar extended its earlier powerful rally in midday US trade racking up gains of more than I percent against the euro, yen, sterling and Swiss franc. The US currency had already advanced strongly during Asian and European hours, as risk- averse investors looked for safety in US assets.

Both the dollar and US stocks were being supported by mounting expectations that the Federal Reserve may cut interest rates to give the sagging US economy a lift. After days of declines, US stocks notched up healthy gains on August 6 on talk of Fed rate cuts, with the down Jones industrial average up 4.36 percent and the Nasdaq composite index up 5.18 percent in lunchtime trading.

The European single currency slumped to fresh five-week lows against the dollar at 96.22 cents, off 1.78 per cent from the prior US close. Sterling slumped 1.60 percent to $1.5349 per pound. The dollar also hit five-week highs against the yen at 121.21 yen, up 1.24 per cent, and roared up 2.08 per cent against the Swiss franc to 1.5131 francs.

For most of the year the dollar has fallen steadily against other major currencies, weighed down by slumping US stocks and concerns about US corporate governance.

The dollar was getting support from speculation that the Federal Reserve could cut interest rates as soon as its next policy meeting on August 13, given recent dismal US economic data and stock market turmoil.

Sterling fell more than a percent to a one-month low against a broadly stronger dollar as talk swirled that US funds were pulling back money home to cover equity losses. But the pound was steady against the euro, which also lost more than a percent against the dollar. Sterling was trading at $1.5418 after falling to a low of $1.54 in earlier trade. It was at 64.75 pence against the euro.

The dollar fell on August 7 despite a rebound in US stocks as other currencies corrected from recent declines as investor sentiment toward US assets stayed mixed.

The dollar backtracked from recent six-week peaks against the euro and yen. It also lost ground to the key commodity currencies - the dollars of Canada, Australia and New Zealand - which had suffered greatly in the past month. The market had been very short dollars and long euros, so the dollar had been rising.

The euro was up 0.86 percent against the dollar at 97.41 cents. The dollar fell by a similar percentage against the Swiss franc to 1.4961 francs but was mostly steady versus Sterling at $1.5385 per pound the dollar drifted 0.42 per cent against the Japanese yen to 120.26 yen.

Sterling lost ground across the board knocked by a wave of chart-related selling after a Bank of England report reignited concern over Britain’s growth outlook. It fell half a percent to $1.5308, hitting a one-month low for a second consecutive day. It fell three quarters of a percent against the euro, hitting a one-week low at 63.30 pence. Sterling’s break below $1.5330/25 was a bearish signal, putting the British currency on track to test last month’s low around $1.5150. Currency markets have been very volatile in recent days, with sterling recording its biggest one-day drop against the dollar on August 6 over a year.

The dollar stayed in tight ranges against other major currencies in Asia on August 8 in a market lacking direction, with some players staying on the sidelines ahead of the US Federal Reserve’s policy meeting next week. The greenback was unable to take advantage of another rise in US share prices on August 7 which saw the Dow Jones industrial average climb 2.20 percent to 8,456.15 and the Nasdaq composite index gain I .70 per cent to 1,280.90.

The dollar, which rose to multi-week highs against the yen and the euro on august 6, came under light selling pressure from profit-takers in early trade, but by midday it had firmed back on July 31 New York levels.

The dollar stayed locked in tight ranges throughout the day in Tokyo, sandwiched between option-related bids from overseas around 120.00 yen and offers from Japanese exporters around 120.50 yen. It was at 120.13/20 yen against 120.25 in late US trade. It was a full yen below a six-week high of 121.23 hit on august 6.

At the close of the week on August 9, the dollar’s latest rally, driven by rebounding Wall Street shares, ran out of steam in Asia as doubts crept in over whether the Fed would deliver on an eagerly anticipated rate cut net week. The US currency hit a six-week high in early trade after three straight winning days for New York stocks helped lift some of the recent gloom.

Fresh Fed comments, casting doubt on a rate cut as one factor behind profit-taking in Tokyo, knocked the dollar off its early highs and down to around 120.63/68 yen in late trade. Earlier, the currency rose to 121.37 yen - its highest since June 26 - carrying over its strength in the US session. Many Japanese exporters had sales order above 121 yen.

The euro edged up to 96.96/04 cents against 96.63 cents in late US trade. Sterling fell by half a percent against the dollar and three-quarters of a percent against the euro weighed down by worse than expected British trade data.

Sterling was trading at $1.5240, having fallen to its lowest level since July 8 for the fourth day in a row. The pound is now down more than six cents from levels seen at the end of July. Against the euro, it fetched 63.55 pence per euro, more than a penny below the two-month peak hit at the end of July. Sterling has been suffering in recent days as the prospect of interest rate rises has receded because of the deterioration in the global economic outlook.