ON the first two days of last week the Pak Rupee weakened in the inter-bank market. However, the dollar buying pressure eased later as most of the overseas payments were cleared, as the fiscal year ended. As a consequence, the rupee recovered sharply versus the dollar, picking up six paisa for buying at Rs59.69 and 10 paisa for selling at Rs59.70.
The rupee remained strong in the remaining days of the week. The rupee did not show much change in the kerb and closed at Rs.60.40 for buying and Rs.60.45 from selling.
Market traders expect the dollars demand to increase as a result of higher oil prices in the world market. The US currency would then show more gains.
On the opening day of last week, the US dollar was firm in the London market, ahead of an expected interest rate increase, which would further bolster yield appeal for the greenback. The Fed is expected to raise rates by a quarter percentage point to 3.25 per cent. Almost all primary dealers with the Fed see a similarly sized rate rise at the central bank’s August meeting.
Meanwhile in the New York market, the dollar and yen retreated against the euro on June 27, on concerns that record oil prices could threaten global growth, with the euro zone currency also garnering support from improving German business confidence.
US crude futures for August delivery neared $61 on buying by speculative funds in the wake of prospects of stronger US and global demand in the fourth quarter.
Late in the New York session, the euro was up 0.5 percent against the dollar at $1.2161 and gained 0.7 per cent versus the yen to 132.91 yen. The euro also got a boost in the European session after word that German business confidence rose in June, as expected, for the first month in five as companies grew more optimistic about both current activity and the future.
The dollar fell 0.5 per cent against the Swiss franc to 1.2682 francs. Sterling, meanwhile, rose to $1.8285. The dollar rose 0.2 percent against the yen to 109.29, within range of an 8-month high.
In addition, the yen was also hurt against the dollar after China said it would not be browbeaten into revaluing its yuan currency peg.
In the New York market the dollar gained a cross the board on June 28, as oil prices retreated, although fears persisted in the market that high crude costs will depress the yen as Japan’s economy relies heavily on imported energy.
US crude oil prices, a key driver in the currency markets, ended lower on June 28 just above $58 per barrel on profit-taking, after hitting an all-time high of more than $60 this week. Still, oil has risen nearly 30 percent in just over a month on concerns about global strains on production and refining capacity.
Late in New York, the dollar traded around 109.96 yen up 0.7 percent from the June 27. Earlier, it climbed as high as 110.07 yen, according to Reuters data, an 8-1/2-month high.
The dollar rose more than 1 percent against the Swiss franc to 1.2810 francs, while sterling fell 0.8 percent against the dollar to $1.8143. Analysts, however, expect the dollar to trade in fairly narrow ranges in the coming weeks as liquidity thins due to the summer season.
On June 29, in the Tokyo Market, the dollar rose to its highest level in more than eight months against the yen.
Meanwhile in the London market, the dollar hit a 10 month high against the Swiss franc and also rose to its highest level since October versus the yen. The dollar had risen to 1.2852 Swiss francs, its highest since August, while against the yen it had risen 0.4 percent to 110.43 yen, its highest since early October.
With the market already pricing in a US rate increase, attention has turned to any hints concerning future rises in the post-meeting statement, although some dealers said the central bank was unlikely to alter its position to keep raising rates at a measured pace.
The key rate in the euro zone has stayed at 2 percent for over two years, while it has held at almost zero percent in Japan for more than four years. With the rate increase factored into the market, some analysts argued that barring a big surprise, the meeting would have minimal impact on the currency market.
The dollar was fetching around 110.02 yen in late Tokyo trading after rising to 110.17 yen, its highest level since mid-October, according to electronic trading platform EBS.
On June 30, the Federal Reserve tightened US borrowing costs for the ninth time running to take interest rate to 3.25 per cent.
In the London market, the dollar rose to 10 month high’s against an index of currencies, after the US Federal Reserve raised rates and signalled more to come, boosting the dollar’s yield appeal against other major currencies.
The United States is looking toward more interest rate rises at a time when most industrialised countries are looking to steady or lower rates, analysts said.
The dollar performed particularly strongly against high-yielding currencies, as it narrowed the yield gap against them. The greenback rose 1 percent on the day to 10-month highs against sterling and more than 1 percent to 8-month highs against the New Zealand dollar.
The dollar also hit 9-month highs against the yen and 13-month highs against the Swiss franc. It gained ground against the euro but failed to break above 10-month highs set in June.
The euro got a lift in European trade from data showing euro-zone manufacturing contracted at a slower rate in June, and a drop in euro-zone unemployment in May to 8.8 per cent. The euro-zone purchasing managers index gave a reading of 49.9 in June, close to the 50 level which separates expansion from contraction.
In contrast to nine successive rises in US interest rates, the key rate in the euro-zone has stayed at 2 percent for over two years and that in Japan has held at almost zero percent for more than four years.
Meanwhile, in the Tokyo market, the dollar hit nine month high’s against the yen and the British pound on July 1. The dollar also struck at 13-month peak versus the Swiss francs, after the Fed lifted rates by a quarter-percentage point on June 30 to 3.25 per cent and repeated it would keep removing its accommodative policy at a “measured” pace.
The dollar traded at 111.05 yen. It rose to a nine-month high of 111.13 yen before exporter selling knocked it back down, dealers said. The pound sank as higher US rates contrasted with rising speculation the Bank of England could cut its key rate from 4.75 per cent, given concerns about the strength of the British and European economies.
ON the first two days of last week the Pak Rupee weakened in the inter-bank market. However, the dollar buying pressure eased later as most of the overseas payments were cleared, as the fiscal year ended. As a consequence, the rupee recovered sharply versus the dollar, picking up six paisa for buying at Rs59.69 and 10 paisa for selling at Rs59.70.
