THE rupee moved both ways versus the dollar in the local currency market on November 7, when all the trading centres reopened after observing Eid holidays. In the inter-bank market, the rupee managed to limit its fall versus the dollar, despite the higher demand for the US currency, which changed hands at Rs59.73 and Rs59.74, down two paisa on previous week, as genuine players indulged in hectic buying to meet the near-term requirements. The rupee closed previous week at Rs59.71 and Rs59.73.
On November 8, increasing demand for dollar pushed the rupee down by two paisa for buying at Rs59.75 and three paisa for selling at Rs59.77, as importers’ demand for dollar surged to meet the higher payment requirements. The trading in the inter-bank market remained suspended on November 9, being public holiday on account of Iqbal Day.
When trading resumed on November 10, after a day break, balanced demand and supply helped the rupee to retain its last level versus the dollar. Firmer trend was witnessed on the day, as the rupee did not show any sharp variation against the dollar, which traded at Rs59.75 and Rs59.77. On November 11, the rupee-dollar parity traded almost unchanged at Rs59.76 and Rs59.77. During the week, the rupee registered a fall of five paisa versus the dollar in the inter-bank market.
In the open market, the rupee slipped versus the dollar on increased demand by the banks, losing 10 paisa against previous week close of Rs59.65 and Rs59.75 to trade at Rs59.75 and Rs59.85 on the opening day of the week. The rupee further lost 10 paisa versus the dollar on the second day of the week in review trading at Rs59.85 and Rs59.95, amid extended demand by the corporate sector. On the third day of the week, the local currency markets remained closed in connection with the 128th birth anniversary of Allama Iqbal. On the fourth day, the rupee shed five paisa more versus the dollar trading at Rs59.90 and Rs60.00.
Upward trend was seen in the open market on November 11, as the rupee recovered 10 paisa for buying at Rs59.80 and gained 12 paisa for selling at Rs59.88, on smooth supply of dollar. Over the previous week, the rupee in the open market lost 15 paisa versus the dollar this week.
Versus the European single common currency, the rupee maintained its recovery on the first day of the trading, gaining 75 paisa over the previous week close of Rs71.65 and Rs71.45, changing hands at Rs70.20 and Rs70.30, due to euro’s persistent sliding against the major currencies in world markets. On November 8, the rupee recovered 20 paisa more versus the euro. It traded at Rs70.00 and Rs70.10, as the single European currency failed to come out of recent weakness versus the greenback.
Versus the euro, the rupee shed 15 paisa for buying at and 10 paisa for selling and traded at Rs70.15 and Rs70.20 on the fourth day of trading. Finally on the fifth day of the week in review, the rupee further appreciated against the euro, gaining 35 paisa changing hands at Rs69.80 and Rs69.90 on falling of the single European currency versus the dollar. Over the week, the rupee managed to recover versus the euro gainingRs1.85 for buying and Rs1.55 for selling.
In the international financial market, the dollar touched an 18-month peak against the euro on November 7, before paring gains as some investors bought euros on expectations the dollar may struggle to advance further in the coming week. Although the dollar has rallied in recent days on expectations of higher US interest rates, a series of technical obstacles is expected to slow a further rise in the US currency this week, analysts said.
The dollar backed away fairly quickly from its highs against the yen after traders booked profits on the greenback’s six consecutive sessions of gains against the Japanese currency. Some analysts recommended caution before diving in to sell dollars wholesale against the yen.
The euro had fallen as low as $1.1776, the lowest since mid-May 2004, dragged down by its losses against the yen. The single currency was at $1.1808, down 0.1 per cent from the prior New York session. The euro was buying around 138.90 yen, down about 0.6 per cent. The dollar was last around 117.61 yen, down 0.5 per cent from last week on profit-taking after climbing as high as 118.38 yen, its highest since August 2003.
Sterling fell to its lowest level in almost four weeks against the dollar as the US currency continued its broad-based climb higher, and after news of an unexpected fall in British factory output in September. It was down half a percent against the dollar at $1.7411, having hit $1.7390 earlier, its lowest since October 12. Some of sterling’s weakness is due to the weaker than expected data, but most of this is due to broad-based dollar strength.
On November 8, the dollar climbed to a two-year high against the euro before paring gains, propelled by bullish sentiment that caused investors who had bet against the US currency to buy it to trim their losses. Expectations of higher US interest rates relative to the euro zone pushed the euro to a low of $1.1711 before it recovered to $1.1782, down 0.3 per cent from the previous day. Against the yen, the dollar was down 0.3 per cent at 117.25 yen, surrendering some of its recent gains.
Since August, the euro has fell nearly 8 cents against the dollar, which has also risen by more than 7 yen in value, primarily due to the favourable US bond yield advantage over yields in the euro zone and Japan. The euro was down 0.6 per cent against the yen at 138.12 yen. Sterling was down 0.4 per cent against the dollar at $1.7400, having hit $1.7328 earlier - its lowest mid July.
On November 9, the dollar advanced against the euro and yen to remain within striking distance of two-year highs, but pared some gains as investors grew cautious ahead of the US trade report on November 10. The euro slipped 0.1 per cent to $1.1762, some 56 points from a two-year low around $1.1706 reached a day earlier. Against the yen, the dollar was up 0.3 per cent at 117.56 yen after briefly dipping below 117.00 yen.
The dollar has risen nearly six per cent against the yen since August. The euro has been under pressure since August, falling five per cent against the broadly rallying dollar. The pound hit the day’s lows against the dollar, falling a quarter per cent against the broadly stronger dollar, to $1.7386.
On November 10, the dollar gained against the euro and the yen with the euro dropping to a new two-year low, after a record US trade deficit failed to dispel investor optimism for higher interest rates. The euro dropped to a low of $1.1678 after breaching an options barrier at $1.17, which had provided support through most of the session. It last traded at $1.1685, down 0.7 per cent from November 9. The euro is now below the $1.1747 level at which it first traded when the currency was launched in January 1999.
Against the Japanese yen, the US dollar climbed 0.6 per cent to 118.24 yen, within striking distance of a 27-month high. The dollar had already been rising before technical trading pushed it to a new peak against the euro. Sterling held steady after the Bank of England left interest rates unchanged, as expected, at 4.5 per cent for the third consecutive month. The pound fell 0.1 per cent to $1.7406 against the dollar.
At the close of the week on November 11, the dollar hit a two-year high against the euro, a day after investors brushed aside data showing a record US trade gap in September and powered the US currency to new peaks. The yen edged up from near a two-year low against the dollar following a report showing Japan’s economy grew slightly more than expected in the third quarter, posting 1.7 per cent growth annualised compared with forecasts for 1.2 per cent.
The data were the latest to show that consumer spending was helping Japan post a sustained recovery from a decade of stagnation and nearly eight years of deflation, but the optimistic economic outlook has done little to help the yen.
Instead the dollar has run rampant to new highs and prompted more funds to shift cash into the US currency, particularly against the euro. An all-time high US monthly deficit of $66.1 billion in September, much bigger than forecasts, did nothing to stop the dollar’s tear through technical barriers and added fuel to this year’s rally.
With the European Central Bank officials giving mixed signals on whether they will tighten policy in the near term, investors have flocked to the dollar’s four per cent - and likely rising - overnight rate. That compares with static rates of two per cent in the euro zone and near zero in Japan. The dollar’s latest run higher was ignited last week close after bursting above its previous peak for the year against the single currency around $1.1870 per euro, followed by its 2004 high near $1.1760.
The euro changed hands around $1.1690 after tumbling as low as $1.1670 on electronic trading platform EBS, the weakest since November 2003. Sterling hovered near a 4-month high against the euro and held steady against the dollar, as investors awaited economic data due next week for more clues on the UK interest rate outlook.
THE rupee moved both ways versus the dollar in the local currency market on November 7, when all the trading centres reopened after observing Eid holidays. In the inter-bank market, the rupee managed to limit its fall versus the dollar, despite the higher demand for the US currency, which changed hands at Rs59.73 and Rs59.74, down two paisa on previous week, as genuine players indulged in hectic buying to meet the near-term requirements. The rupee closed previous week at Rs59.71 and Rs59.73.
