November 4, 2002	Monday	Sha’aban 28,1423

The currency trading remained range bound this week with the rupee/dollar parity moving both ways in a narrow range. Activity continued to be sluggish in the absence of moving factors. Investment has shifted to share market.

There is lack of buying interest due to the declining value of dollar. Some fresh dollar- buying by foreign banks emerged in the inter-bank market on October 29, when rupee came under slight pressure and the dollar traded at Rs58.98 and Rs58.99, reflecting 2 paisa decline in rupee value.

The increased dollar supply on October 30, due to heavy dollar selling by local and foreign banks helped the rupee to recover its overnight losses. The dollar traded at Rs58.90 and Rs58.92 after rupee gained 8 paisa over the dollar. Balanced demand/supply of dollar in the following days helped the rupee to gain another two paisa. At close the dollar was trading at Rs58.88 and Rs58.90 reflecting 8 paisa gain over the previous weekend’s level of Rs58.96 and Rs58.97.

In kerb, trading remained dull throughout the week and the parity continued almost unchanged. During the week, the dollar touched its highest level versus the rupee at Rs59.0 and the lowest level at Rs58.90 for buying. The rupee closed the week at Rs58.90 and Rs59.0 on November 1, reflecting 7 paisa gain over the previous weekend close. Euro trading, however, remained volatile. After opening the week on a positive note, the rupee weakened by 54 paisa against the euro in the last four days. At close the euro was trading at Rs58.25 and Rs59.00, up 75 paisa against the previous weekend close of Rs57.50 and Rs57.70.

At the inter-bank forex counter, the rupee weakened against most major currencies. During the week it made some fresh losses versus the British pound, the Canadian, Australian, New Zealand and Singapore dollars, the Swiss franc, the Japanese yen, the Danish and Norwegian krones and the Swedish krona. The rupee also made some fresh gains against the Hong Kong dollar, the Malaysian ringgit, the Chinese yuan, the Kuwaiti dinar, the Saudi and Qatari riyals and the UAE dirham.

On the international front, on October 28, the dollar fell to its weakest levels in two weeks against major currencies as fears surfaced that the data expected this week will show the US economy weaker than many had anticipated. In the late US trading, Europe’s single currency traded around 98.40 cents against the dollar, up 0.85 per cent from its prior US close and its strongest since mid-October.

Versus the Japanese yen, the dollar bought 123.60 yen, nearly 1-1/2 units below its offshore trading high and down 0.60 per cent from its prior US close. The currency pair was also at its lowest since mid-October. The dollar fell to two-week lows against the Swiss franc at around 1.4875 francs, and sterling around $1.56.

Sterling shuttled in familiar ranges taking its cues from swings in the euro/dollar rate, a traders positioned for the key US economic data. The pound was a touch firmer at $1.5540 in the late European trade, but down slightly from the last one week’s peak. It was slightly weaker against the euro at 63.20 pence as the single currency recovered from the early weakness to push to a two-week high against the greenback.

The dollar fell to its lowest level in more than three weeks against the yen on October 29, after a report showed the US consumer confidence fell to a 9-year low, which cast doubt on the durability of the US recovery. The dollar fell as far as 122.35 yen, its weakest level since early October, before recovering to stand near 123 yen, down 0.50 per cent from its prior US close. Versus the euro, the US currency also hit a three-week low, but recovered in late trading as major US stock indexes recovered from a sharp sell-off. The single currency traded around 98.30 cents, down 0.15 percent from its prior US close.

The British pound held close to the previous session’s two-week high against the dollar after data showed the US consumer confidence at its lowest in nine years. Sterling was trading at $1.56 in the late European trade, just short of two-week highs scaled a day earlier. Against the euro, the British currency dipped to the lower end of its recent trading range at 63.20 pence.

Japan’s long-awaited array of reforms lifted the yen as traders mutedly endorsed the actions as a first step towards dispatching the problems that have hobbled the world’s second-largest economy for more than a decade. In the late US trading, the dollar bought 122.86 yen, down 0.22 per cent from its prior US close and near 3-1/2 week low at 122.30 yen on October 29. The euro also traded near 3-1/2 week low against the yen, hovering just below 121 yen, down 0.12 per cent on the day. Against the dollar, the euro was little changed, trading near 98.40 cents

Sterling held fairly steady against the dollar and euro, unmoved by the news of sliding British consumer confidence. The British currency was steady at 63.13 pence per euro. It was also trading flat at $1.5565, down just over half a cent from the two-week highs scaled on October 28 as the dollar began to come under pressure on worries the US economy was in worse shape than anticipated. All five of the Hamblin consumer confidence barometer’s key measures fell in October. The most marked decrease was seen for the measure gauging the development of the general economic situation over the last 12 months, which fell by three points to stand at -11. On October 31, the dollar limped lower in Asia, taking the euro to a two-week high as uncertainties over the US economy reigned ahead of key data later this week. The yen also kept its edge on the dollar, though having a harder time topping a recent 3-1/2 week high after the Japan’s long-awaited bank reform plan and anti-deflation package failed to live up to its radical billing.

The dollar languished at 122.4/47 yen compared with 122.92 in late New York and a touch away from the recent 122.32 low. The greenback otherwise drew moderate support from the talk of bids from the Japanese public pension funds, as well as a technical point around 122.25, a 38.2 per cent retracement of its September 3-October 21 rise. The euro touched a two-week high of $0.9880 before falling back to $0.9869/74. Against the yen, the euro held at 120.84/95 back near its rate of 120.89 in late New York after an earlier rise succumbed to profit-taking.

Sterling jumped to 2-1/2-week highs against the dollar after the US data failed to live up to market expectations. Sterling rose as far as $1.5625, its strongest showing since October 14, before easing towards $1.56. But the pound under-performed the buoyant euro, and was trading around two-week lows of 63.32 pence.

At the close of the week on November 1, the dollar came off three-week low on the euro and its worst showing in nearly a month against the yen but gains were held in check by caution over the key US data later in the day. Drawing support from the options-related bids and talk of buying from the Japanese trust banks, the dollar edged up to 122.75/80 yen by midday in Tokyo from an earlier low of 122.37.

The dollar’s recovery was very limited and sentiment remains very shaky on the outlook for the US economy. The greenback had a better day against the euro, with the single currency backing off an overnight three-week high of $0.9910, but still supported at $0.9890/95 from $0.9836. Against the yen, the euro seesawed at 121.40/51 from 120.90 in the late US trade.

But it was still short of the 122.92 yen reached in the late New York and traders saw plenty of scope for it to re-test this week’s near four-week low of 122.30. Otherwise, the trading range held tight ahead of a three-day weekend in Japan.

Sterling plunged by one per cent to a two-month low against the euro following the dollar down on increasing expectations of a US rate cut next week. The dollar also fell to a three-month low against the euro beyond the key $1.00 level, as the successive data releases this week pointed to a deterioration in the US economy.