04 October 2004	Monday	18 Shaban 1425

Corporate demand kept the dollars somewhat aggressive but the banks' dollar-selling in the inter-bank market and the central bank's strict monitoring, as well as its indirect intervention this week helped the rupee trim its losses.

Current higher demand for dollars is being attributed to rising global oil prices, which hit $50 a barrel by weekend.

The rupee failed to maintain its firmness versus dollar in the inter bank market on the week's opening day and lost four paisa over the previous week close, changing hands at Rs59.15 and Rs59.17 on September 27.

Panic buying of dollars continued on September 28, when the rupee touched the new high mark of Rs59.25in the early session, before it finally settled at Rs59.20 and Rs59.22, shedding five paisa more over the dollar.

Exporters held back their dollars stock anticipating further increase in dollar's value in the coming days. However, State Bank's indirect intervention helped the rupee to restrict sharp losses.

On September 29, the rupee was stuck up in a tight range in the absence of major demand and fresh motivating factor in the interbank market, holding prevailing levels against dollar at Rs59.21 and Rs59.23.

Heavy oil payments requirements during the week continued to exert pressure on the rupee. On September 30, the rupee lost five paisa more versus the dollar, trading at Rs59.26 and Rs59.28. Last week, the dollar has touched the new high at Rs59.40 on its brisk demand.

The rupee in the inter bank market closed the week almost unchanged at Rs59.25 and Rs59.27 on October 1. Over the previous week close the rupee this week posted a loss of 14 paisa against the dollar in the inter bank market. In September alone the rupee has lost 47 paisa against the dollar.

In kerb trading, despite persistent demand for dollars, the rupee showed a firm trend throughout the week. It gained eight paisa against the dollar and traded at Rs59.67 and Rs59.72 on the week's opening day.

On September 28, the rupee inched up with two paisa gain, changing hands at Rs59.65 and Rs59.70. It maintained its upward rising trend versus dollar on September 29, and further recovered three paisa to trade at Rs59.62 and Rs59.67.

On September 30, the recovery trend persisted and the rupee gained another two paisa to trade at Rs59.60 and Rs59.65 versus the dollar. On October 1, the rupee inched up with three paisa gain at Rs59.57 and Rs59.62 versus dollar. Over the previous week close, the rupee this week gained ten paisa in the open market against the dollar. In September, it, however, lost 39 paisa.

Against the European single common currency the rupee continued to show a fluctuating trend throughout the week. It gained 15 paisa against euro on September 27, and traded at Rs72.75 and Rs 73.05 on the week's opening day.

It, however, shed five paisa on September 28, changing hands at Rs72.80 and Rs73.10. On September 29, the rupee held to its overnight levels versus euro and traded unchanged at Rs72.80 and Rs73.10.

It failed to hold its firmness on September 30, versus the European single common currency, losing 10 paisa to trade at Rs72.90 and Rs73.20. On October 1, the rupee registered a sharp decline of 45 paisa versus euro, which traded at Rs73.35 and Rs73.65. During the week, Euro crossed Rs.73 barrier, with the rupee suffering 40 paisa fall. In the whole of September, the local currency lost Rs1.35 against the euro.

In the international financial market the dollar climbed to six-week highs against the yen on September 27 on concern about the impact of record-high oil prices on Japan's import-dependent economy.

While high oil prices can hurt the dollar because the United States is the world's biggest importer of crude, they tend to hurt the yen more because of Japan's complete dependence on imported oil.

Some traders in New York and London suspected Japan was buying dollars in the foreign exchange market but a Japanese Ministry of Finance official in New York declined to comment.

Although the dollar was lower against major European currencies, the US currency remained within summer-long trading ranges, which many analysts believe will stay in place for at least another month.

In New York, the dollar was up about 0.45 percent at 111.29 yen, off an earlier high of 111.41 yen. The euro was 0.8 per cent higher at 136.79 yen, breaking new multi-week highs.

Against the dollar, the euro was up 0.15 per cent at $1.2292, while the dollar was flat against the Swiss franc, at 1.2609 francs. Sterling was up 0.22 per cent at $1.8085.

The pound was a couch firmer against the dollar at $1.8072, close to a one-month high scaled at the end of last week. Sterling weathered more evidence of a slowdown in Britain's housing market as traders focused on potential inflows to the British currency from a large acquisition.

The news helped sterling keep a firm footing against the euro and inch higher against the dollar despite data showing a sharp fall in British mortgage lending last month.

On September 28, the dollar hit a six-week high against the yen as investors worried about the impact of high oil prices on Japan's economy while shrugging off news that US consumer confidence had slipped. US crude oil futures touched record highs above $50 a barrel on supply worries compounded by concerns over low US fuel stocks ahead of winter demand.

The Japanese currency also slipped to four-month lows against the euro. In New York, the dollar was up 0.17 per cent to 111.42 yen off earlier highs of 111.73 yen. The euro was trading at $1.2319 against the dollar, up 0.15 per cent on the day. Sterling was up 0.18 per cent to $1.8126. Against the Swiss franc, the dollar finished down 0.06 per cent to 1.2594 francs.

On September 29, the yen rose smartly as oil prices fell on diminished supply worries, while sterling slumped after a British central banker indicated the bank's rate tightening cycle may be nearing an end.

The yen rose about a half per cent against both the dollar and the euro The yen recently has been falling against most major currencies on the belief that higher oil prices would be particularly harmful to Japan, which imports all of its oil.

Earlier, the dollar firmed modestly against the euro following release of the final reading of US second-quarter economic growth, which showed activity in the world's biggest economy was brisker than previously though.

It hit session lows against the yen around 110.67 yen and was trading at 110.83 yen, down 0.47 per cent, in late New York trade. The euro was down 0.39 percent against the yen at 136.72 yen. Against the dollar, the euro was trading at $1.2334, up 0.09 per cent on the day. Sterling was down 0.77 percent to $1.7993.

Sterling has fallen in the past month as analysts have scaled back rate rise expectations, following five quarter-point rate rises since November 2003 to 4.75 percent.

The pound fell three quarters of a percent against the dollar and euro after comments from a policy-maker and weak domestic data encouraged the view that British interest rates were at ore near their peak.

The pound also hit the week's lows of 68.47 pence per euro, within a quarter penny of recent seven-month lows, and dropped to 103.2 on its trade-weighted index. The index has a euro weighting of 64.82 per cent, a dollar weighting of 16.49 per cent and a yen one of 7 per cent.

On September 30, the dollar dropped to its lowest level against the euro since mid-July and suffered steep losses against other currencies after a breach of key chart levels unleashed a wave of selling.

The also slid more than one per cent against the Swiss franc to a near six-week low. The euro peaked at $1.2436. In New York, it was up about 0.8 per cent to $1.2432. Against the yen, the dollar traded down 0.8 per cent to 110.01 yen. The dollar also weakened against the Swiss franc, down 1.1 per cent at 1.2454 francs. Meanwhile, sterling was up 0.7 per cent to $1.8117.

Sterling forged a fresh seven-month low against the rising euro as scaled-back UK interest rate expectations took their toll and the single currency charged higher across the board.

While the euro charged 0.75 per cent higher on the day against the greenback on a cocktail of pre Group of Seven nerves and options-related activity, the pound trailed behind with 0.5 per cent gains on the day.