IN the domestic market, the Pakistani rupee gained over the euro, after the later fell in world markets. On May 30, the euro was at Rs76.00 for buying and Rs76.20 for selling. On June 3, the parity had changed against the euro and it was now at Rs74.70 and Rs74.90 for buying and selling respectively.
On the opening day of last week, the rupee gained 35 paisa against the US dollar for buying and selling in the kerb market at Rs60.40 and Rs60.50, respectively. It lost 10 paisa the following day and on June 2, it had lost more in relation to the dollar to stand at Rs60.70 and Rs60.80 for buying and selling. The following day it recovered 20 paisa against the dollar.
In the inter-bank market also, the rupee drifted lower and closed at Rs59.64 and Rs59.67 for buying and selling, respectively, against Rs59.58 and Rs59.59 on the opening day of the week.
The euro touched seven-month low in the EU referendum fallout. On June 1, the euro fell loosing almost 10 per cent since March. Dutch voters rejected the European Union constitution, deepening a crisis in the bloc. Earlier France had rejected the European Union constitution in a referendum that was seen as setting off a political convulsion in the bloc. In the New York market, the dollar rose to seven-month high against the euro on May 31. The euro slid 1.3 per cent against the dollar.
Against the strengthening US currency, the euro fell to $1.2297 in the New York session, piercing major support around $1.2450 and technical barriers at $1.23, according to the Reuters data.
The weekend ‘No’ vote (in France was deemed to be negative for the euro and had sent the euro/dollar into a new trading range, said Michael Woolfolk, senior currency strategist with the Bank of New York. Analysts said the euro zone needed deep reforms because of its anaemic growth and low confidence. But the French vote underscored voters’ distrust of a reform drive that could limit the social protection.
At the beginning of the week when the French voters rejected the proposed European Union constitution, the euro skidded in the London market.
While France’s rejection of the EU treaty was not expected to jeopardize the monetary union underpinning the single currency, it did raise questions about the public support behind the EU and future integration.
In a thin market due to holidays in Britain and the United States, the euro slid 0.8 per cent to $1.2466, its lowest level since October. Technical factors added to euro’s distress with the single currency triggering a wave of automatic sell orders after breaking below $1.2490 — last week’s low.
The euro also fell almost one per cent against the yen, to 134.54, and lost ground to the Swiss franc and British pound as investors sought havens from volatility associated with the referendum.
The euro stayed under pressure as Netherlands rejected the charter. The euro has also fallen to this year’s low against the Swiss franc at 1.5301 francs and a four and a half month low against the yen at 133.02 yen.
Sterling was at a four week high on June 1, against the euro amid media reports that high-level German officials attended a meeting at which a possible demise of the European Monetary Union had been raised.
The pound extended losses to a 7-1/2 month low against the dollar as weak British manufacturing and consumer credit data contrasted with recent the strong US numbers. The euro fell as low as 67.49 British pence.
Both the Bundesbank and the finance ministry said there was no danger of a failure and that the euro was a success story, and rejected the discussion as “absurd”.
In the New York market, the euro dropped further on June 1. It sank to $1.2160 and the decline accelerated as investors rushed out of long positions in the currency. The euro was broadly weaker, falling to a 5-1/2 month low against the Swiss franc, a 9-month low against sterling and a 9-month low against the yen.
Since the year began, the euro has confounded many analysts by declining more than 10 per cent against what has turned out to be a resilient dollar, which is strong across the board.
The euro-zone currency’s recent weakness has caused some Wall Street banks to adjust their near-term forecasts. Merrill Lynch now expects the euro to finish June at $1.27 compared with the Bank’s earlier forecast of $1.34. Credit Suisse First Boston sees the euro at $1.20 in three months compared with a prior prediction of $1.25.
Overnight the European common currency dropped after a report that possible failure of the EMU, the system that gave birth to the euro, was discussed at a meeting attended by high-level German financial officials.
In the Tokyo market, the euro crawled up from an eight month low against the dollar on June 2, trying to recover from the week’s battering after France and Netherlands both soundly rejected the EU constitution. The euro bought around $1.2220, up about 0.3 per cent on June 2.
In the London market, the euro rose against the dollar on June 2, gaining over one percent from an 8month low. US official interest rates stand at 3 per cent and futures have priced in at least two more quarter-percentage point increases to take the rate to 3.5 per cent by mid-August
In the New York market, the dollar edged lower on June 2, after a week long rally as investors booked profits ahead of the US payrolls report. The euro rose to $1.2275 up 0.75 per cent, but still down 9.5 per cent since January. Last month, the euro dropped around 4.4 per cent against the dollar, its worst monthly performance in four years.
Currencies showed little reaction to the US initial jobless claims that climbed to 350,000 in the week ended May 28, 25,000 more, nor to a report that showed first-quarter productivity grew by 2.9 per cent, compared with 2.6 per cent in the fourth quarter of last year.
Meanwhile, in London the euro also rose after stumbling when an Italian government minister said Italy should consider leaving the single currency. The euro lost as much as three percent after this week’s rejection of the European Union constitution by two of the bloc’s founder members, France and the Netherlands.
Underlining concerns about prospects for political and economic stability in Europe, the euro fell steeply but briefly after euro-sceptic Italian Welfare Minster Roberto Maroni said Italy should leave the euro zone and re-introduces the lira.
The dollar was down more than a third of a percent versus the Japanese currency, at 107.90 yen, in profit-taking ahead of the US data.
It the London market, the sterling rose against the dollar and also against the euro, shrugging off a weaker than expected survey on Britain’s service sector.
In the absence of strong domestic lead, the pound focused on movements in the euro which stabilized above the eight-month low against the dollar following a recent sell-off on concerns about prospects for political and economic stability in the euro-zone.
IN the domestic market, the Pakistani rupee gained over the euro, after the later fell in world markets. On May 30, the euro was at Rs76.00 for buying and Rs76.20 for selling. On June 3, the parity had changed against the euro and it was now at Rs74.70 and Rs74.90 for buying and selling respectively.
