November 10, 2003	Monday	Ramazan 14, 1424

Steadier trend persisted in the local currency market, where the rupee/dollar parity moved in narrow range this week. In the inter-bank market, the local currency remained firm versus the dollar in the absence of any major demand.

Though no major variation was noticed in the market, the rupee suffered 5-paisa decline in three trading sessions and a rise of 3-paisa in one session. Thus the net impact during the week was 2-paisa fall for buying and one paisa fall for selling in rupee value against the dollar. The week commenced on a negative note with rupee changing hands at Rs57.39 and Rs57.41 versus the dollar on November 3. The parity touched the week’s lows at Rs57.40 and Rs57.42 on November 4, but then appreciated versus the dollar on November 5, touching week’s highs at Rs57.37 and Rs57.39. It closed the week at Rs57.40 and Rs57.41 on November 7.

In kerb trading, the rupee opened the week on a positive note and gained 5-paisa versus the dollar to trade at Rs57.35 and Rs57.40 on November 3, against the previous weekend’s level of Rs57.35 and Rs57.45. However, it assumed downtrend as the dollar supply shrunk in the next two trading sessions. The rupee lost 10-paisa on November 4, when the dollar was seen changing hands at Rs57.45 and Rs57.50. Falling trend persisted on November 5, as dollar remained in short supply. The rupee lost another 10-paisa for selling and 5-paisa for buying to trade at Rs57.50 and Rs57.60, the week’s lowest level. The week closed unchanged on November 7, on marginal improvement in dollar supply.

Against the euro, the rupee maintained its last week’s strength making further gains this week, amid minor fluctuation. It commenced the week on a positive note and gained 75 paisas in two days trading. On November 4, the rupee was seen changing hands at Rs65.50 and Rs65.70 versus the European single common currency, attaining the week’s highest level. It, however, closed the week at Rs65.60 and Rs65.80 on November 7. The rupee gained 65 paisas over the euro in the week.

Against other major currencies at the inter-bank forex counter, the rupee extended gains over the British pound, the Canadian and Singapore dollars, the Swiss franc, the Danish and Norwegian krones, the Malaysian ringgit, the Kuwaiti dinar and the Saudi riyals. It lost ground versus the Japanese yen, the Australian and New Zealand dollars, the Swedish krona, the South Korean won and the Thai bhat, while it showed stable trend against the Chinese yuan, the Hong Kong dollar, the Qatari riyal and the UAE dirham.

In the international financial market, the dollar surged to one-month highs against the euro and yen on November 3 after strong US manufacturing and construction data beat expectations and drove home to investors that the US economy is firmly in recovery mode. The euro dropped to a one-month low of $1.1430 against the dollar, hitting resistance in the 50-day moving average area of $1.1436. In late New York trade, the euro recouped some ground to $1.1458, still a loss of more than one per cent from last week’s New York close.

The dollar has ricocheted up from a three-year low against the yen hit last week to its highest value in a month. The dollar traded at 111 yen up more than one per cent on the day, but down from a high of 111.50 yen. The dollar surged to a six-week high against the Swiss franc reaching a high of 1.3641 francs before drifting back to 1.3601, still a gain of 1.48 per cent on the day. Sterling fell to a 1-1/2 week low of $1.6759, a loss of more than 1 per cent on the day.

Sterling steered a steady course holding just below recent five-year highs against the dollar, as strong British manufacturing and retail data cemented expectations of a UK interest rate hike this week. The British currency flirted with new six-month peaks against the euro in early trade but eased to stand little changed on the day at 68.35 pence.

On November 4, the dollar fell broadly taking its biggest hit against the Japanese yen as weak stocks and a gloomy US jobs survey threw cold water on a dollar rally ahead of October employment report. Early in the day, the dollar dropped steeply against the yen as Japanese exporters cashed in on the greenback’s rally to a one-month peak in the previous session. The dollar hit a low of 109.38 yen, a loss of more than 1.50 per cent from opening week’s New York close before rebounding slightly to 109.53 yen.

Strong stock market gains in Tokyo helped the yen. The euro also fell versus the yen, hitting a two-month low of 125.80 yen off more than 1.10 per cent on the day. The euro gained back some lost ground against the dollar after falling more than 1 per cent. The euro rose to a session high $1.1515 before slipping back to $1.1501, a gain of 0.35 per cent on the day. The dollar was flat against the Swiss franc at 1.3607 francs. Sterling rose as high as $1.6844 before slipping back to $1.6806, a rise of 0.28 per cent on the day.

On November 3, the dollar charged up more than one per cent to its strongest since late September against the euro, yen and Swiss franc after an institute for the supply management survey showed the US manufacturing was recovering at a sturdier pace than expected and forced dollar bears to buy the greenback back.

On November 5, the dollar rose against its main rivals but a haphazard trading pattern highlighted a lack of conviction in the market for buying the greenback despite more evidence of a strengthening the US economy. A surprise increase in October service sector activity and strong September factory orders data failed to spark an immediate rally for the dollar.

The Australian dollar hit a six-year high of US $0.7118 after the RBA’s action but drifted down to US $0.7087 still a gain of 0.80 per cent on the day. Next to raise rates could be Britain. Investors expect the Bank of England to raise interest rates — currently at 3.50 per cent — for the first time in four years in a bid to cool a surge in consumer debt. Sterling, however, fell to $1.6735, a loss of 0.42 per cent on the day. The euro fell to $1.1438 off 0.55 per cent but up from the session low $1.1414. The dollar traded at 109.86 yen up 0.30 per cent on the day but under a high of 110.07 yen.

The pound edged lower after coming within a whisker of seven-month highs against the euro and fell against the dollar as investors adjusted position a ahead of an anticipated UK rate rise. News of a rate rise in Australia helped the pound in early European trade, with the Bank of England (BoE) expected to follow suit with a quarter-point hike.

The pound was trading at 68.28 pence per euro down from the day’s highs of 68.06 and recent seven-month highs of 68.01, but still slightly up on the day. The pound fell nearly half a per cent against the dollar to $1.6738, tracking losses in the euro/dollar rate. Sterling hit five-year highs near $1.71 last week.

On November 6, the dollar nudged higher against its major rivals after a stronger than expected weekly jobless claims report that stoked speculation October employment report would beat expectations. The dollar’s advance was tempered by the Federal Reserve Chairman Alan Greenspan’s cautiously optimistic outlook for the US economy, which also emphasized that low inflation allows policy makers to be more patient about raising interest rates. That means 45-year low benchmark rates, a negative factor for the dollar, are likely to remain low for the time being. Greenspan also warned of the dangers to the economy from ballooning budget deficits, but emphasized cutting spending rather than raising taxes.

After the weekly claims report, several Wall Street, firm raised their monthly payrolls estimates. In the wake of the claims report, the euro dropped to a near seven-week low of $1.1390. However the euro drifted back up to $1.1411 for a loss of 0.18 per cent from the previous New York close Euro/yen traded at 125.79 yen, up 0.16 per cent.