The Pakistani rupee gained against the US dollar in the inter-bank market during the outgoing week. On the opening day of the week, the rupee stood at Rs59.66 for buying and Rs59.67 for selling. By the close of the week it had gained 3 paisa on buying and 2 paisa on selling.

The rupee showed a similar trend in the open market against the US dollar. After having depreciated on June 8, to Rs60.60 and Rs60.70 for buying and selling, it gained 20 paisa and 25 paisa, respectively. Dealers attribute this on easy supply of dollars, from the remittances sent back home.

Besides, the forward buying of dollars by importers was also limited which provided a ground for the rupee to appreciate in terms of the US currency.

Against the euro, the rupee fluctuated. While on the opening day of the week, the rupee picked up 20 paisa for buying at Rs74.10 and 40 paisa for selling at Rs74.30. It weakened by June 8, and was quoted at Rs74.70 and Rs74.90, respectively. By June 10, it stood at Rs74.60 and Rs74.80 for buying and selling, respectively.

On the opening day of last week, the dollar slipped against the euro and the yen both in the Tokyo and London market, on weak US jobs data.

The euro however, remained vulnerable to concerns about the political and economic future of the European Union. Jobs growth in May was the worst in 21 months, data showed coming after figures a week earlier which showed manufacturing activity was the slowest in almost two years.

The Federal Reserve’s steady lifting of the US rates to three per cent from one per cent in the past year has increased the currency’s yield advantage over the euro and the yen, helping snap a three-year dollar slide.

On June 6, at midday in the London market the euro was up 0.3 per cent at $1.2271, having hit an 8-month low of $1.2157 last week.

The euro was slightly lower at 131.50 yen. The dollar fell to a two-week low against the yen at 107.00.

In the New York market also the dollar weakened on the first day of the week after reaching multi-month highs a week earlier. The euro was up 0.3 per cent, after having sunk to an eight-month low of $1.2157 a week earlier.

Near-term prospects for the euro, however, remain bleak. The euro zone could be facing the prospects of lower interest rates, with European Central bank Chief Economist Otmar Issing saying policy strategy does not rule out an interest rate cut. A cut in rates would further underscore the dollar’s interest rate advantage over the euro. The US rates stand at three per cent in the euro zone.

The dollar fell to 106.85, while the euro hit a new 11-month low at 130.96 yen and sterling hit a four-month low at 193.97 yen. But the pound climbed against the dollar to $1.8236, while the greenback slipped to 1.2484 Swiss francs.

Speculators in the International Monetary Market have accumulated the largest net long dollar position since March 1999, at around $15.6 billion for the week ended May 31, according to ABN AMRO and Bank of America.

On June 7, in the Tokyo market, the euro bounced off an 11-month low against the yen. The euro was fetching around 131.25 yen up around 0.2 per cent on the day. It had earlier fallen to 130.81, its lowest level since late June 2004.

The dollar slipped on June 8, in the New York and Tokyo market, on doubts about more US rate increase. In the New York market, the euro was up 0.2 per cent at $1.2282, the pound was up 0.6 percent at $1.8345 and the Australian dollar was up 0.5 percent at $0.7684. The dollar hit a new three-week low against the yen of 106.51 yen, and lost a third of one per cent against the Swiss franc to trade at 1.2451 francs.

The euro’s gains against the dollar were capped by continued speculation, although quelled by European Central Bank President Jean-Claude Trichet in an interview with Reuters, that the ECB might consider cutting rates to boost the flagging euro zone economy.

The ECB has kept benchmark borrowing costs on hold at two per cent for almost two years. Meanwhile, the Fed has raised its benchmark federal funds rate eight times since June last year, to three per cent. During that time however, longer-term rates have actually fallen. The yield on the US 10-year Treasury note is now down at around 3.9 per cent from 4.6 per cent.

In the London market, sterling hit its highest level in almost three weeks against a waning dollar on June 8 and eased from recent 10-month highs against a strengthening euro. Against the euro, the pound eased by a quarter of a per cent to 67.03 pence, shy of June seventh 10 month high at 66.81 pence.

On June 8, in the New York market, the dollar reversed its losses against the euro. The euro dropped to $1.2224 at midday down 0.5 per cent from a day earlier. The euro had found a footing earlier this week after a 5-1/2 per cent drop over the past month to an eight-month low of $1.2157 last June 8, driven by the European political instability and widening interest rate and economic growth differentials.

Meanwhile, in the London market, the dollar rose to its highest level against the euro in nine months on June 9, as traders looked for a signal from Federal Reserve chief Alan Greenspan that the US interest rates would continue to rise. The euro traded at $1.2234, less than a cent above nine-month lows set a week earlier and steady from the US close.

In the New York market, the dollar rose modestly on June 9, after the Federal Reserve Chairman said the US economy is on a firm footing and that interest rates can continue to be raised at a measured pace.

By late on June 9, the euro was down nearly 0.2 per cent at $1.2215 after falling as low as $1.2177 earlier in the session — within 20 pips of last week’s 8-month low. The dollar came within a whisker of scaling last week’s 8-month high against the Swiss franc of 1.2597 francs, settling back to around 1.2550 francs.

Against the yen, the dollar was up 0.2 per cent at 107.51 yen, while sterling was down around 0.2 per cent at $1.8196.

In the London market, the dollar steadied against the euro on June 10, at 1155 GMT, the euro fetched $1.2226, little changed from the US close and from the week’s opening levels. The euro hit its lowest levels since September of $1.2157 last week. The dollar was also steady against the yen at 107.40 yen.

The dollar remains supported by increasing optimism over the US economy and worries about cracks in the euro, after France and the Netherlands voted against an EU constitution in referendums last week.

The European budgetary issues are also in focus. France and Germany stepped up demands for Britain to make a “gesture” over its European Union rebate to help the EU agree to a long-term budget, following joint talks in Paris.

Meanwhile, sterling hit a 10 month high against the euro on the EU budget wrangling and a narrower than the expected US trade gap. Wrangling over the UK’s contribution to the European Union coffers — France and Germany want it to give more — boosted the pound against euro already under pressure following French and Dutch rejections of the EU constitution last week.