September 2, 2002	Monday	Jamadi-us-Saani23,1423

The rupee-dollar parity ruled mostly stable in the inter-bank market in the absence of major demand and the lack of support from the State Bank of Pakistan. Not much buying interest was there.

The rupee opened the week on August 26, on a positive note as its gained 20 paisa on the first day to trade at Rs59.30 and Rs59.35 versus the dollar against the previous weekend close of Rs59.50 and Rs59.55. In the following four days the dollar moved in a narrow range between Rs59.32 and Rs59.34 for buying. Finally it closed the week at Rs59.35 and Rs59.36, with the rupee gaining 15 paisa in the week.

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

In the kerb, extended dollar selling pulled the rupee to new highs during the week, touching Rs59 against the dollar. The continued forex exchange inflows and the heavy selling of dollar by the exporters, amid lacklustre trading, helped the rupee to gain strength over the dollar. Demand for the dollar remained thin. Throughout the week, there was uncertainty over the future trading of the currency business. The rupee closed the week at Rs59.10 and Rs59.20 gaining 40 paisa against the previous weekend close of Rs59.50 and Rs59.60. On the other hand euro rebounded on a slight improvement in the demand during the week. The rupee gained 30 paisa against the euro on the first day, and then assumed downward trend on rising demand and lost 80 paisa in the following three days. Thus from Rs57.50 and 57.80 on Aug 26, the euro rose to new highs touching Rs58.30 and Rs58.60 on August 29. It however, failed to maintain its firmness and Aug 30 and lost 10 paisa to rupee to close the week at Rs58.20 and Rs58.50.

In the international financial market, the dollar rose slightly on August 26 as the US stocks ticked higher towards the close of trade, but the activity was light as traders looked ahead to a heavy data calendar later this week. The euro was down 0.11 per cent against the dollar at 97.20 cents. The dollar was up 0.12 per cent against the yen at 119.73 yen. Earlier, the US home sales figurer for July, the only US economic data showed sales of new single-family homes rising far more than expected to a record 1,017,000 million annual rate, a 6.7 per cent rise from June. Economists had expected a decline.

On August 27, the dollar dropped sharply as the weak US consumer confidence data and declining stocks depressed sentiment towards the greenback despite news of a huge surge in durable goods orders. Against the euro, the dollar was more then one per cent lower on the day at 98.20 cents per dollar, a four-day low. The dollar was down 1.44 per cent against the Swiss franc at 1.4824 francs, coming under pressure after the Swiss food giant Nestle SA moved to quell rumours it was considering a top-dollar bid for the US candymaker Hershey Foods Corp.

Dollar/Swiss had taken on a slightly bid tone on August 26 on speculation that such a multi-billion dollar deal would have boosted demand for dollars, if Nestle were to pay in cash. Sterling rose 0.8 per cent to $1.5336. Overnight, the dollar had sunk to just shy of 118 yen when short-term seeing in a thin market pushed the greenback through key chart points and triggered automatic sell orders. By the close of trade in New York, it was trading at 118.16 yen, down 1.3 per cent in the session.

The British pound rose against the dollar recovering from the last week’s seven-week lows, following the euro higher as the greenback weakened against major currencies. The dollar was down across the board with the unwinding of long positions ahead of the US data and some nervousness over the UPS rhetoric about Iraq undermining the greenback. The pound was up slightly at $1.5233 in the early European trade, just over half a cent above last week’s seven week low of $1.5158. It was almost unchanged against the euro at 63.87 pence in thin volumes as it followed the US unit.

On August 28, the dollar recouped some of its overnight losses versus the yen boosted by short-covering; but an uncertain US economic outlook kept a tight lid on the greenback. The dollar dived to a nearby one-week low of 117.97 yen in the US trade after a surprisingly sharp falls in consumer confidence. Mild short-covering in the Tokyo trade pushed the dollar back to 118.41/43 yen up from 118.10/15 in the late US trade but below around 119.50 marked at the start of this week.

The euro stayed little changed at 98.19/24 cents holding up near its nearly one-week high of 98.38 in the US trade. Europe’s single currency was changing hands at 116.29/35 yen compared to 116.21 yen in the late US trade. Data released painted a mixed picture of the US economy, denting the dollar’s firm undertone on the back of resilience in the Wall Street shares in recent weeks. Durable goods orders rocketed 8.7 per cent in July, exceeding market expectations of a rise of 1.2 per cent and briefly lifting the dollar.

The pound edged up against the dollar and cure in late European trade boosted by the data showing the booming British housing market was helping to keep cash in the pockets of consumers. Dealers said this helped sterling out of its early trough to rise as high as $1.5375 before settling to $1.5365 and indicated mortgage loan funds were helping spur consumers.

On August 29, the dollar fell against the yen in thin trade as many players refrained from aggressive trading ahead of a blizzard of the US and Japanese economic data later in the week. The dollar briefly rose to a session high of 119.07 in the morning but was soon pushed down on selling by speculators and exporters. The drop accelerated after meeting stop-loss selling around 118.50 and 118.30yen.

The dollar was at 118.04 yen after falling to a low of 117.87. It stood at 118.59 yen in the late US trade. The euro firmed to 98.15 cents from 97.93 cents in the US trade. The single currency stood at 115.88 yen compared win 116.20 yen. Last week the dollar climbed above 120 yen on firmness in the US stock markets, but its failure to maintain that level this week has compounded traders’ view that it is essentially held in a range.

The pound rose to a three week high against a broadly weaker dollar as concern over the health of the US economy hammered the greenback. Sterling was just a touch higher versus the euro, but dealers said it generally seemed to be tracking the single currency up against the greenback sterling was up one percent at S1.5480 after peaking at $1.5500, its highest level since August 6. The euro was down slightly at 63.66 pence.

The dollar fell in Asia at the close for the week on August 30, pressured by a weak performance on the Wall Street and fears that the looming US data could deepen worries about the US economy. There was muted reaction to a flood of the Japanese economic data that hit the market in the morning, as the figures did not change the fundamental view that Japan’s economic recovery is fragile.

It was quoted at ] 17.96/99 yen down from 118.22 in the late US trade. The euro was almost Mat at 9X.45/52 cents against currency was at 116.17 yen compared with 116.32. The dollar fell to 10-day low of 117.45 yen and the euro rose to a two-week high of 98.86 cents in New York, partly because a recent rally in the US share prices seems to have run its course. US stocks were mixed. The Dow Jones industrial average ended down 0.27 per cent at 8,670.99 while the tech heavy Nasdaq gained more than 1.5 per cent to 1,335.77.

Some dealers said repatriation by some Japanese investors ahead of half-year book closing on September 30 has been pressuring the dollar and this could continue for a while. The dollar briefly sagged against the yen on the headline 0.5 per cent rise in Japan’s April-June GDP from the previous quarter.

Sterling held at a three-week high against a broadly lower euro as strong domestic economic data gave the pound a boost. But the British currency came off earlier three-week highs versus the dollar as stronger than expected US data lent the greenback support. It was up about a third of a per cent against the euro at 63.35 pence, holding close to session peaks. The pound was little changed at $1.5480 after peaking early on at $1.5545, its highest level since August 6. The dollar boosted after the Chicago PMI index came in stronger than expected in August.