The week commenced on a quiet note as the supply of dollars was sufficient to meet the demand. The rupee-dollar parity rates remained stable in the inter-bank market changing hands at its weekend levels of Rs60.62 and Rs60.64 on October 30. Firmness prevailed in the currency market as the rupee resisted fresh losses in terms of dollar.
However, on October 31, the rupee shed one paisa and traded at Rs60.63 and Rs60.65 against the dollar. The rupee quickly recovered its overnight losses on November 1, gaining three paisa to trade at Rs60.60 and Rs60.62 against the dollar.
On November 2, it did not show major change versus the dollar though it lost one paisa over its overnight levels, changing hands at Rs60.61 and Rs60.63. On November 3, the rupee in the inter-bank market continued unchanged moving in a narrow range, amid slow trading. The dollar changed hands at its overnight levels versus the local currency. During the week in review, the rupee gained one paisa in relation to dollar compared to its previous week close levels of Rs60.62 and Rs60.64.
In the open market, the rupee commenced the week on a negative note shedding two paisa for buying and seven paisa for selling to trade at Rs60.55 and Rs60.65 versus the dollar on October 30 after closing previous week at Rs60.53 and Rs60.58. On the second day of the week in review, the rupee did not show any change versus the dollar and traded at its overnight levels of Rs60.55 and Rs60.65 on October 31.
However, the rupee in the open market managed to recover on the third day on improved supply of dollars. It picked up seven paisa on the buying counter and another 15 paisa on the selling counter to trade at Rs60.48 and Rs60.50 against the dollar on November 1. The recovery proved short lived as the rupee, unable to hold its overnight firmness on the fourth day, shed two paisa for buying and ten paisa for selling on November 2, shifting hands versus the dollar at Rs60.50 and Rs60.60.
Falling trend prevailed in the open market on November 3, and the rupee further weakened versus the dollar, shedding eight paisa on the buying counter and three paisa on selling counter, changing hands at Rs60.58 and Rs60.63 on higher demand for the American currency. The rupee thus ended the week with five paisa depreciation versus the dollar in the local currency market this week.
Versus the European single common currency, the rupee displayed strength on the opening day of the week. It gained thirteen paisa in terms of the euro changing hands at Rs76.65 and Rs76.75 on October 30, against previous week close of Rs76.78 and 76.88. The rupee extended its overnight gains versus the euro on the second day of the week in review and recovered 20 paisa more to trade at Rs76.45 and Rs76.55 on October 31. Failing to hold ground on dollar’s fall in the world markets, the rupee on the third day lost 31 paisa versus the euro and traded at Rs76.76 and Rs76.86 on November 1.
On November 2, the rupee continued its downtrend versus the euro in the open market and shed nine paisa versus the euro to trade at Rs76.85 and Rs76.95. Earlier in the morning session, the rupee had touched the low level at Rs77.00. The rupee extended overnight losses versus the European common currency on the fifth day of the week in review. It shed five paisa more on November 3, when it traded at Rs76.90 and Rs77.00. When compared with the previous week close, the rupee lost 12 paisa versus the euro, amid fluctuations this week.
In the international financial markets, the dollar was little changed against the euro and yen on the week’s opening day with dealers mostly on the sidelines ahead of meetings of the Bank of Japan and the European Central Bank later this week. The dollar got a brief boost after US personal income raised more than expected and consumption rebounded in September, suggesting economic growth is likely on solid footing.
The dollar exhibited a mixed reaction to the personal income and spending report, though ended the morning largely unchanged. On October 30, the euro traded relatively unchanged on the day at $1.2730. Against the yen, the dollar slipped roughly 0.2 per cent at 117.40 yen. The yen maintained earlier gains as investors’ unwound extreme short positions in the currency ahead of the Bank of Japan’s semi-annual outlook on the economy.
The euro shrugged off comments from the United Arab Emirates’ central bank governor that the UAE was still considering diversifying its reserves and that the euro could account for up to 10 per cent of the currency mix. The remarks echoed those made by the UAE in the summer, and analysts also noted that the Gulf state holds relatively modest foreign exchange reserves - just $23 billion last December. Falling crude prices weighed on the currencies of oil exporters Norway and Canada.
The dollar rose 0.6 per cent to C$1.1260 and was up 0.4 per cent to 6.5650 crowns. Sterling hit a 15-month peak against the euro and a one-month high versus the dollar after robust British mortgage lending and money supply data cemented expectations of an interest rate hike next week. The pound was up 0.17 per cent against the dollar at a fresh one-month high of 1.9022. Against the euro, sterling hit a 15-month high of 66.79 pence.
On October 31, the dollar fell to a one-month low against major currencies after weak US economic data reinforced expectations the Federal Reserve will not raise interest rates any time soon. The US consumer confidence slipped and business activity in the Midwest slowed in October, but a rise in employment costs at the fastest rate in more than two years in the third quarter suggested inflation will remain a concern. The dollar fell across the board after the National Association of Purchasing Management-Chicago’s October business barometer fell to the lowest level since August 2005. Separately, the US consumer confidence also slipped slightly in October.
The euro rose 0.4 per cent on the day to $1.2783 before retracing slightly to $1.2756. The dollar fell 0.7 per cent against the yen to about 116.63 yen and then pared losses to 116.95 yen. For the month, the dollar is down around one per cent against the yen, ending four months of gains against the Japanese currency as data pointed to slowing US growth. But despite the slide lower in the dollar, market participants are quick to point out that the greenback remains in trading ranges against many major currencies.
The biggest movers on the day were the Australian dollar and the New Zealand dollar, both of which rose 0.6 per cent against the US dollar. The Australian dollar hit its highest since May, thanks to solid month-end demand from portfolio managers and speculators looking to capitalise on the country’s relatively high interest rates among major economies. Sterling hit a 15-month high against the euro, as robust British October house price data firmed expectations of a rate hike next week, but pared most of its gains after a surprise fall in retail sales.
But sterling’s gains were later tempered by data from the Confederation of British Industry, showing that retail sales volumes had fallen this month at their fastest pace in seven months, compared with the market’s expectations of an increase. The pound held steady against the euro at 66.91 pence, off an earlier 15-month peak of 66.70. Against the dollar, sterling hit a one-month high of $1.9064, with the greenback coming under broad selling pressure after a weaker than expected Chicago PMI reading for October.
On November 1, the dollar was steady against the euro and yen recovering from earlier declines after investors took a rosy view of softer-than-expected US manufacturing data ahead of weekend’s payrolls data. The dollar earlier hit one-month lows after a report from the Institute for Supply Management showed growth in manufacturing activity nation-wide slowed in October. Before the report, there was market talk that manufacturing may have contracted, which would have meant a reading below 50.
The euro was little changed at $1.2753. Against the yen, the dollar was at 117.06 yen.
Sterling hit its highest in nearly three months against the dollar fuelled by expectations of further interest rate hikes in Britain, which could potentially narrow the yield differential with the US Data showing a strong pick-up in British firms’ prices in October. The pound stood at $1.9098 against the dollar, having hit its highest level since early August of $1.9137 after the US data. A rise above $1.9144 would take sterling to 18-month highs against the dollar.
On November 2, the dollar weakened against the euro after the president of the European Central Bank indicated the ECB could raise interest rates next month, potentially narrowing the US interest rate advantage. However, risks going into October US payrolls report curbed further gains in the euro and kept major currencies trading in very narrow ranges. Sentiment on the dollar has been damaged in the past week by softer-than-expected US economic data. Also, the dollar’s nominal yield advantage has dissipated, with the yield spread between 2-year Treasury notes and the same maturity euro zone paper at its narrowest since February 2005.
The week commenced on a quiet note as the supply of dollars was sufficient to meet the demand. The rupee-dollar parity rates remained stable in the inter-bank market changing hands at its weekend levels of Rs60.62 and Rs60.64 on October 30. Firmness prevailed in the currency market as the rupee resisted fresh losses in terms of dollar.
