April 10, 2006	Monday	Rabi-ul-Awwal 11, 1427

BEARISH sentiments were observed in the inter-bank market on the opening day of the week, as the rupee was unable to maintain its firmness due to the rising demand for dollars. The rupee, however, resisted sharp fall in its value due to a rising trend in the dollar inflows. On April 3, the rupee shed four paisa versus the dollar and traded at Rs60.02 and Rs60.04, against the previous week’s close of Rs60.06 and Rs60.08 in the previous week.

Falling trend persisted in the inter-bank market on the second day of the week in review, as expanding demand for dollars by the corporate sector to cover necessary payments pushed the rupee down further on April 4, when the rupee was seen changing hands at Rs60.09 and Rs60.11 after shedding seven paisa versus the dollar.

The rupee continued to weaken versus the dollar. In the early session on April 5, owing to higher demand by the importers, the rupee touched the low level at 60.16 and 60.17 before retreating to Rs60.13 and Rs60.15 at the close of the third day of the week in review, down four paisa for buying and three paisa for selling over its overnight level.

As a result of dollar selling by the exporters and rising trend in the remittances on April 6, the rupee showed firmness versus the dollars on the fourth day of the week in review and recovered 12 paisa to trade at Rs60.01 and Rs60.03, the biggest gain in a single day rally. On April 7, the rupee extended its overnight winning streak, picking up seven paisa more versus the US currency, on easy supply, to trade at Rs59.96 and Rs59.98. During the week it recovered 10 paisa versus the dollar in the inter-bank market, amid fluctuations.

In the open market, the rupee shed three paisa in relation to the dollar, changing hands at Rs60.23 and Rs60.28 on April 3, as against Rs60.20 and Rs60.28 at the previous week close. On April 4, it, however, managed to recover five paisa for buying and three paisa for selling and traded at Rs60.18 and Rs60.25.

The rupee maintained its upward rising trend for the second consecutive day on April 5, and gained six paisa for buying and seven paisa for selling to trade at Rs60.12 and Rs60.18. The rupee failed to maintain its firm trend versus the dollar on April 6, shedding three paisa for buying and two paisa for selling to trade at Rs60.15 and Rs60.20.

The rupee traded unchanged versus the dollar at Rs60.15 and Rs60.20 on April 7. Compared to the previous week close, the rupee in the open market recovered five paisa for buying and eight paisa for selling versus the dollar this week.

Versus the euro, the rupee gained 15 paisa on April 3, when it traded at Rs72.30 and Rs72.40 against the previous week close of Rs72.45 and Rs72.65. But on the following day, the rupee lost overnight firmness and lost 45 paisa to trade at Rs72.75 and Rs72.85.

On April 5, the rupee showed sharp fluctuations versus the euro in the early session, shedding 65 paisa at Rs73.35 and Rs73.45. It, however, moved up slightly by five paisa to close the day at Rs73.30 and Rs73.40. On April 6, the rupee further lost 20 paisa for buying and 15 paisa for selling, changing hands at Rs73.50 and Rs73.55 versus the single European currency.

On April 7, the rupee, however, gained 70 paisa versus the euro and traded at Rs72.80 and Rs73. During the week, the rupee shed 35 paisa, amid fluctuations, versus the European single common currency.

In the international financial market, the dollar fell slightly against the euro on April 3, after a report showed a surprise slowdown in the US manufacturing sector growth last month, suggesting economic growth is moderating. Meanwhile, the euro was broadly stronger - rising to a fresh two-year peak against the Swiss franc and testing a one-year high against sterling - ahead of a policy setting meeting of the European Central Bank.

The euro began trading in New York at around $1.2050, a level traders said was attractive for corporate accounts looking to hedge their exposure. The euro rose 0.2 per cent from last week close, to $1.2144, and climbed 0.2 per cent also against the Swiss franc to 1.5845 francs. Against sterling, the euro edged up 0.1 per cent to 69.89 pence.

The dollar was flat at 117.65 yen, more than a full yen off the three-week high of 118.80 yen reached earlier in the global session. It was little changed against the Swiss franc at 1.3045 francs. The euro may rise further but could very well retrace heading into the jobs report, as traders consolidate risk heading into the data.

On April 4, the dollar fell to two-month lows, weighed by growing expectations the European Central Bank will raise interest rates next month as the Federal Reserve winds down its nearly two-year credit tightening campaign. The euro also hit a record high against the yen and touched two-year highs against the Swiss franc after a news report overnight said the ECB may raise euro zone rates at its May meeting to 2.75 per cent.

The euro was at $1.2260, up one per cent from the previous day close. It had risen as high as $1.2277 during the session, the highest since it reached a 2006 high of $1.2323 in January. Against the yen, the euro rose 0.8 per cent to 144.00 yen, hovering around its record high of 144.19 yen hit earlier in the session. The dollar was modestly lower against the yen at 117.41 yen, down 0.2 per cent.

On April 5, the dollar fell to two-month lows against the euro weakened by the diminishing advantage of the US interest rates over those in other regions. The euro by late afternoon was testing a two-month high of $1.2305 reached earlier, after having hit a 15-month high against sterling and a record high against the yen.

The euro was also up 0.4 per cent against sterling at 70.10 pence, having earlier hit a 15-month high of 70.21 pence. Against the yen, the euro had hit a record high of 144.56 yen. Against the dollar, the pound stood at $1.7517, up more than 50 ticks from levels seen before Trichet’s news conference.

On April 6, the euro weakened after market expectations for a May euro zone interest rate increase were sharply reduced following comments by the European Central Bank chief, giving respite to the weary dollar. The ECB chief said the bank’s policy-making body did not share the same view as the market.

The euro fell swiftly to an intraday low of $1.2197 before slightly recovering to $1.2225, down 0.6 per cent on the day in its largest one-day slide in two weeks. It had earlier risen to a seven-month high of $1.2323. Against sterling, the euro retreated 0.5 per cent to 69.76 pence, after hitting a 15-month high of 70.21 pence on April 5.

Against the yen, the euro was down 0.3 per cent at 143.88 yen, after hitting a record high earlier at 144.92 yen. With the focus squarely on interest-rate differentials after the ECB meeting, the dollar was firmer against other major currencies. The dollar was last at 117.63 yen, up 0.3 per cent, while sterling was virtually flat at $1.7525.

At the close of the week on April 7, The euro slipped further from a seven-month peak against the dollar and a record high versus the yen, a day after the European Central Bank chief smothered market expectations for an interest rate rise in May. With the market’s gaze firmly trained on rate differentials among major currencies, the dollar had suffered against the euro all week on building expectations for such a signal from the ECB President.

The euro had slipped 0.2 per cent to $1.2200, well off a seven-month peak of $1.2333 hit before the ECB chief’s remarks. It fell about 0.2 per cent to 143.70 yen on renewed selling in Asia, extending losses from 144.88 yen hit on electronic trading platform EBS the previous day — the highest since the euro was launched in January 1999.

Sterling hit its highest level in 9 days against the euro. It rose as far as 69.52 pence per euro. But sterling fell more than half a per cent to 3-day lows against the dollar at $1.7415 after data showing the US employment at a 4-1/2 year low of 4.7 per cent in March, and a slightly stronger than expected 211,000 increase in non-farm payrolls.