When trading resumed after the weekly holiday, the rupee/dollar parity showed a firm trend in the inter-bank market changing hands at Rs59.72 and Rs59.73 on October 24, after recovering two paisa against previous week’s close of Rs59.70 and Rs59.72.
Corporate demand for dollar pushed the rupee value down despite the higher inflows on October 25. The downward trend persisted in the inter-bank market as rupee shed three paisa for buying and four for selling to trade at Rs59.73 and Rs59.77. Higher import bills made the dollar dearer in the market as banks increased the US currency buying to meet the payment requirements.
On October 26, modest recovery was seen in the value of the rupee on easy supply of dollar. The rupee moved slightly because of higher trend in the inflows.
The rupee/dollar parity traded at Rs59.71 and Rs59.73, after gaining two paisa for buying and four paisa for selling. On October 27, the rupee remained unchanged against the dollar. It traded at its overnight levels of Rs59.71 and Rs59.73.
On October 28, rupee’s upward trend versus the dollar persisted in the currency market for the third consecutive day, owing to sufficient supply of dollar. The rupee gained one paisa for buying and two paisa for selling to trade at Rs59.70 and Rs59.71.
The fall in the dollar’s value was expected as a result of rise in the dollars’ supply in the market. During the week, the rupee in the inter bank market managed to recover one paisa over the previous week close.
In the open market, the rupee gained five paisa against the dollar trading at Rs60.05 and Rs60.10 on the first day of the week, as it managed to gain on easy inflows of remittances from overseas Pakistanis ahead of Eid-ul-Fitr. Last week the parity had closed at Rs60.10 and Rs60.15.
On the week’s second day, the rupee gained five paisa in the morning session, to trade at Rs59.95 and Rs60.05 due to slight improvement in dollars’ supply but then it quickly lost ground shedding five paisa on increase in dollar demand towards the close of the day, firmly holding its overnight level versus the dollar at Rs60.05 and Rs60.10.
The rupee in the open market managed to recover five paisa versus the dollar on October 26, when it traded at Rs60 and Rs60.05.
It also showed further improvement in the open market on the fourth day of the week, picking up 10 paisa to trade at Rs59.90 and Rs59.95.
High inflows of dollar by the overseas Pakistanis and foreign countries’ aid for the Earthquake victims boosted the rupee to recover its ground versus the dollar in recent days. On October 28, the rupee gained five paisa more against the dollar. It traded at Rs59.85 and Rs59.90 on smooth supply of dollars. Over the previous week close, the rupee in the open market gained 15 paisa versus the dollar this week.
Against the European single common currency, the rupee shed 15 paisa trading at Rs71.40 and Rs71.50 on the opening day of the week in review as compared to its last weekend’s levels of Rs71.25 and Rs71.35. The rupee gained 10 paisa more against the euro changing hands at Rs71.30 and Rs71.40 on the second day of trading. It, however, slipped versus the euro on the third day of the week, shedding 65 paisa at Rs72.05 and Rs72.15 on rising euro in the overseas market.
On October 27, the rupee recovered its overnight losses against the euro and gained five paisa trading at Rs72.00 and Rs72.10.
The rupee again picked up 10 paisa versus the euro and traded at Rs71.90 and Rs72.00 on the fifth day of the week in review. This week, the rupee shed 65 paisa against the European single common currency.
In the international markets the dollar maintained its surge versus other major currencies. It pruned some losses on October 24, as markets cheered the nomination of White House adviser Ben Bernanke as Federal Reserve chairman, comforted that he backed a slow but steady rise in the US interest rates.
The euro slightly pared its gains against the dollar, trading at $1.1984, up 0.3 per cent from late last week close. The dollar also came off lows against the yen, trading at 115.42 yen, down 0.4 per cent. The dollar gained a few points against the Swiss franc shortly after the announcement, although it was still trading 0.4 per cent lower at 1.2869 francs. Sterling was flat at $1.7686.
On October 25, the dollar posted steep losses after weaker-than-expected US consumer confidence data stoked concerns hurricanes and soaring oil prices could slow the economy’s momentum and the pace of interest rate rises. Dealers said the dollar’s fall accelerated after investors unloaded long currency positions in partly technically-driven trading. Long dollars are effectively bets a currency will appreciate.
The weaker-than-expected confidence report fed into a breathtaking bout of dollar selling that began in European trading overnight. Dollar weakness appeared to be in the cards after market player encountered repeated resistance in pushing euro/dollar below $1.19 in recent days.
The euro rose to session highs around $1.2117 before trading back down to $1.2093 in late trading, up 0.9 per cent from the previous day. Some currency analysts also cited strong demand for euros from central banks making foreign exchange reserve shifts, which had helped the euro climb from the $1.1940 level earlier in the global session.
Against the yen, the dollar fell 0.3 per cent to 115.05 yen. The dollar was trading down 0.8 percent against the Swiss franc at 1.2772 francs. Sterling rose 0.8 percent to $1.7834. The dollar has benefited for much of 2005 from Fed rate hikes and rising yields, which have burnished the appeal of some dollar-denominated financial instruments.
On October 26, the dollar rallied on a day devoid of significant US economic data, as investors focused on higher US Treasury bond yields, which enhanced the attractiveness of dollar-denominated assets, Treasury yields have risen this week on uncertainty about Federal Reserve monetary policy under Ben Bernanke, the nominee for new Fed chairman, amid rising inflation driven by higher oil prices.
In late trading, the euro traded lower at $1.2068 down 0.3 per cent from a day earlier, after hitting a 2-week high of $1.2139 early session. The dollar rose 0.7 percent against the yen to 115.82 yen. Against the Swiss franc, the dollar climbed 0.5 per cent to 1.2830 francs. But sterling dipped 0.5 per cent to $1.7750.
But the dollar’s gains against the euro were limited by Japanese investors seeking to buy euro zone bonds after the German business confidence index rose to its highest level in five years on October 25, analysts said. That spurred talk that the European Central Bank’s next move might be a rate rise.
Ob October 27, the dollar retreated as generally weak US economic data and political troubles of the Bush administration undermined confidence in the government and the economy, analysts said. Possible indictments of White House officials over the leak of a CIA agent’s name and the withdrawal of President George W. Bush’s nominee Harriet Miers from consideration as a US Supreme Court Justice have weighed on a market that, for once, is not obsessed with higher US interest rates.
In late trading, the euro rose to $1.2136, up 0.6 percent from previous day, but off its earlier highs at $1.2174. Against the yen, the dollar retreated from a two-year peak of 116.22 yen hit in Asia, to trade at 115.48 yen, down 0.3 per cent. The dollar retraced some of its losses in the afternoon session as traders’ squared positions. The dollar fell 0.7 per cent against the Swiss franc to 1.2737 francs. Sterling, meanwhile, gained 0.4 per cent to $1.7825.
At the close of the week on October 28, the dollar dipped against the yen ahead of third-quarter growth figures for the US economy while the euro kept its gains on growing expectations the European Central Bank will raise rates early next year. Month-end selling of dollars for yen by Japanese exporters weighed on the US currency, while individual investors and Japanese importers kept support firm at 115 yen.
The euro was little changed at $1.2140 after rising 0.6 per cent on October 27.
Sterling eased against the dollar after briefly testing the previous day’s one-month high, in line with moves in major currencies. It held to $1.7795, down 0.15 per cent from Thursday’s closing levels. The pound was unchanged against the euro at 68.07 pence.
When trading resumed after the weekly holiday, the rupee/dollar parity showed a firm trend in the inter-bank market changing hands at Rs59.72 and Rs59.73 on October 24, after recovering two paisa against previous week’s close of Rs59.70 and Rs59.72.
