ON the opening day of last week, the rupee maintained its weekend levels against the dollar in the inter-bank market for buying and selling at Rs59.37 and Rs59.39 respectively. The rupee held its level, as the State Bank raised its discount rate from 7.5 per cent to 9 per cent to check rising inflation in the economy.
On April 4, the Pak rupee appreciated by seven paisa against the greenback in the open market. The rupee however, lost 20 paisa in relation to the euro for buying and selling at Rs77.50 and Rs77.80 respectively. Dollar’s depreciation against the major currencies strengthened the single European currency.
In the inter-bank market, the rupee shed two paisa on the buying side at Rs59.39 and one paisa on the selling side at Rs59.40. There has been some increase in dollar buying in the inter-bank market, to meet oil payments.
In the near future the rupee is expected to retain its firmness as other Asian currencies did not move sharply against the dollar for the last several months.
The rupee lowered in the following two days as demand for dollars rose for meeting oil payments. At the same time, rising trend in remittances, and selling of export proceeds, helped the rupee to trim its losses, market sources said.
By April 15, the Pak rupee was Rs.59.42 from buying and Rs.59.44 for selling.
In the New York market the dollar weakened on the first day of last week, after reaching highs against the euro and yen a week earlier. The euro was up 0.3 per cent at $1.2973, as was sterling at $1.8907. Against the Japanese yen, the dollar was around 0.3 per cent weaker at 107.86 yen and 1.1934 Swiss francs respectively. The market awaited US trade figures.
In the past month, the dollar has risen around five per cent against the yen and the euro, hitting a five-month high of 108.90 yen and a two-month peak of $1.2800 per euro last week, according to electronic trading platform EBS.
The dollar fetched around 107.65 yen, after falling to 107.52 yen, its lowest level since April 1. It was at 107.86 yen in late US trade on April 11. The euro was little changed at $1.2980 after touching a high of $1.3004 on April 11.
On April 12, the dollar rallied against the euro in volatile trade despite news of a record US trade deficit of $61 billion in February. Dealers initially sold the dollar after the Commerce Department early in the US session announced February’s $61 billion trade gap. But they quickly bought it back as they trimmed over-extended bets against the currency.
Federal Open Market Committee minutes released later in the session showed the Fed is concerned with rising inflationary pressures. But they failed to give a clear indication the central bank will tighten monetary policy more aggressively than the market currently expects. As the dollar was already sharply higher, dealers used the minutes as an excuse to lock in some profits.
In New York, the euro was around $1.2918. The greenback was up around 0.4 percent against the Swiss franc at 1.991 francs, while sterling was unchanged at $1.8909.
On April 14, the dollar remained flat in the New York market, while it climbed slightly in Tokyo due to Japanese investor demand and also forged ahead against the euro and yen in the London Market.
In New York, the dollar was softer against major European currencies in session dominated by technical and market speculation. US retail sales for March rose 0.3 per cent, less than economists’ forecast of 0.7 per cent. Excluding autos, retail sales inched up 0.1 percent, undershooting economists’ forecasts for an 0.5 per cent rise.
The greenback was weaker against the yen, largely because of the decline in euro/yen, traders said. The dollar was down at 107.31 yen, while the euro was down at 138.63 yen. The dollar was little-changed against he Swiss franc at 1.1995 francs, with large US Swiss banks buyers in notable size earlier in the session, dealers said. Sterling edged up to $1.8941.
In Tokyo the dollar climbed. Demand for dollar by Japanese investors helped lift the currency broadly during an otherwise quiet session. The nearly 0.6 per cent drop in the benchmark Nikkei stock average also weighed on the yen.
Japanese investors bought 1.03 trillion yen ($9.60 billion) of foreign bonds and stocks in the week ending April 9, according to Finance Ministry data on April 14, as they put cash to work in the new fiscal year that started this month.
Traders have been baffled by the dollar’s sharp and surprising rebounds this week after US reports showing the trade deficit hitting a record $61.0 billion in February and poor retail sales in March.
The dollar rose to 107.85 yen from late New York levels around 107.35. The US currency also gained against sterling, the Swiss franc and the Australian dollar.
In the London market, the dollar strengthened against the euro and yen. Some market participants attributed the dollar’s strength to the recent slide in oil prices. Others said demand for euros faltered on concern before a French vote on the EU constitution next month. The dollar gained 0.75 percent against the yen to trade around 108.07 yen. It also gained over one percent against the Swiss franc to trade at $1.2110.
In the London market, the dollar fell after disappointing US economic data more than offset news that the United States attracted more capital inflows in February than expected the dollar was down nearly half a percent at $1.2866 to the euro by mid day on April 15, after hitting two month highs beyond $1.2770 a day earlier. It was down 0.1 per cent against the yen at 108.10
Many traders suspect the dollar’s rally this week has been driven by speculative traders unwinding dollar-funded bets in commodity and oil markets given renewed concerns about the pace of global growth. Poor corporate results sent US stock markets to their lowest level in 5-1/2 months on April 14 and major US indices looked set to hit fresh 2005 lows at the open.
In the New York market, the dollar hovered near two month highs against the euro and the Swiss franc on April 14 amid positive sentiment and persistent speculation about a big investor buying dollars.
In late New York trading, the euro was around $1.2815, down about 0.8 percent from late April 13. The euro had earlier slipped below $1.2800 to two-month lows around $1.2768 according to Reuters data.
Against the Japanese yen, the dollar was up about 0.8 percent at 108.12 yen. The Swiss franc, the dollar gained 1.2 per cent to 1.2132. Sterling was down 0.7 percent at $1.8816.
A close of the euro below $1.2700 and of the dollar above about 1.2300 Swiss francs could confirm a sustained dollar rebound, said Jordan Kotick, global head of technical analysis with Barclays Capital in New York.
Billionaire investor Warren Buffett wagered $21.4 billion against the dollar last year. The last few days, traders in New York have said rumours that Buffett may be reducing his short-dollar position have boosted the greenback.
