September 17, 2007	Monday	Ramazan 04, 1428

The rupee remained almost firm versus the dollar this week though the rupee/dollar parity weakness persisted on the opening day of the week, as the rupee further extended its weekend slide against dollar in the interbank market on September 10, after shedding two on its previous week close of Rs 60.61 and Rs60.63 to trade at Rs60.63 and Rs60.65 on low supply of dollar. On September 11, the rupee/dollar parity traded unchanged on improved dollar supplies to cover demand.

Firmness prevailed in the inter bank market on the third consecutive day on September 12, as the rupee managed to hold ground trading unchanged versus the dollar at Rs60.63 and Rs60.65. No change was witnessed in the rupee/dollar parity on the fourth trading day. The parity remained firm, with the rupee changing hands at its overnight levels versus the US currency on September 13.

Banks remained closed on September 14 for zakat deduction, being first Ramadan. The inter bank market rates were not announced on the fifth day of trading. The week closed on a firm ground with the rupee in the inter bank market losing only two paisa against the dollar in the entire week due to easy supply of the American currency. Every year, the rupee maintains a study trend during the month of Ramadan due to increased inflows of remittances.

In the open market, the local currency resumed trading on a positive note posting five paisa gain against the American currency. It traded at Rs60.80 and Rs60.85 on September 10, as compared to its last weekend’s level of Rs60.85 and Rs60.90. On September 11, the rupee maintained its overnight level trading unchanged versus the dollar. The rupee/dollar parity traded unchanged in the open market for the third consecutive day on September 12

However, on the fourth trading day of the week, the rupee managed to extend its firmness further against the dollar, gaining five paisa on September 13, changing hands versus the dollar at Rs60.75 and Rs60.80. On September 14, the rupee continued its rising trend versus the dollar, recovering another five paisa on the fifth day of trading. It was seen changing hands at Rs60.70 and Rs60.75 at close. This week, the rupee in the open market managed to recover 15 paisa against the dollar.

Versus the European single common currency, the rupee continued its downtrend and shed four paisa on the opening day of the week in review, trading at Rs83.45 and Rs83.55 against previous week close of Rs83.41 and Rs83.51. The rupee further extended its weakness versus the euro on the second trading day of the Rs83.50 and Rs83.60.

On the third trading day, the local currency suffered a sharp fall versus the euro. It lost 25 paisa in a single day trading at Rs83.75 and Rs83.85.The euro continued it sharp rise versus the rupee crossing Rs84 barrier this week. On the fifth day of trading it was seen changing hands at Rs84.35 and Rs84.45, down 60 paisa in last two days. During the week in review, the rupee shed 94 paisa against the European single common currency.

In the international financial markets, the dollar hit a 15-year low against a basket of currencies on the week’s opening day, as investors braced for the Federal Reserve to cut interest rates next week to stimulate a US economy showing signs of fatigue. Euro-zone interest rates, meanwhile, are seen rising before the year is out, diminishing the dollar’s yield advantage and sending it to its lowest against the euro in a month.

In New York trading, the euro was up 0.2 per cent at $1.3795, near a one-month high of $1.3816 hit earlier. The yen, though, fell 0.25 per cent to 113.65 per dollar after data showed Japan’s economy shrank 0.3 per cent in the second quarter, reinforcing views that Japanese interest rates will stay at 0.5 per cent, the lowest in the developed world. Traders said short dollar/yen trades were being squeezed out, helping the dollar reverse some of weekend’s 1.7 per cent plunge against the yen.

The greenback hit a one-month low at 1.1841 francs. Sterling touched a one-month high against the broadly softer dollar with the US currency weighed down by expectations of an interest rate cut next week. The pound was steady versus the dollar at $2.0304, having earlier traded as high as $2.0331 on September

On September 11, the dollar neared a record low against the euro as expectations of a Federal Reserve interest rate cut continued to erode the greenback’s appeal to global investors. The dollar struggled against most other currencies, however, as housing and credit crises have shown signs of curtailing US growth. A report showing US payrolls shrank in August for the first time in four years increased fears of recession.

In late New York trading, the euro was up 0.3 per cent at $1.3835, a breath away from a record high above $1.3850. The dollar also hit a 15-year low against a basket of major currencies for the third straight trading session. The dollar rose half a percent to 114.29 yen and the euro gained 0.8 per cent to trade at 158.10 yen. The pound hit a one month high versus a broadly weaker dollar. It was up 0.2 per cent versus the dollar at $2.0308, just off a one-month high of $2.0336 hit earlier in the session.

On September 12, the dollar fell to a record low against the euro as investors braced for the Federal Reserve to cut interest rates next week. Meanwhile, recent remarks from European policymakers have suggested future euro-zone rate hikes remain on the table. The combination helped push the euro to an all-time high above $1.39 and kept it on track for its sixth straight day of gains against the US currency. Against a basket of currencies, the dollar plumbed a fresh 15-year low and it was unable to hold gains on the yen after the resignation of Japanese Prime Minister.

The euro last traded at $1.3905, just below a record peak at $1.3915. It was up 0.4 percent at 158.70 yen. The dollar fell 0.4 per cent to 1.1847 Swiss francs. Against the yen, it was down 0.1 per cent at 114.15. The yen slipped on news that Abe had stepped down but recovered as traders sold the dollar against the euro. Sterling fell to a four-month low against the euro and slipped versus the dollar. The pound was down 0.1 percent versus the dollar at $2.0304, coming off a one-month high of $2.0365 struck earlier in the day.

On September 13, the dollar rebounded modestly against the euro but remained near a record low as markets braced for a US interest rate cut and rose against the yen amid political and economic uncertainty in Japan. The dollar has been under pressure since last week’s unexpectedly weak US jobs report fed speculation that the Federal Reserve may cut the 5.25 per cent federal funds rate by as much as half a percentage point at a September 18 meeting.

The euro was last at $1.3885, pushed down 0.15 per cent by profit-taking ahead of weekend data but still near a record high of $1.3927 hit earlier in the global session. Traders also said options-related barriers in the $1.3950-$1.40 area were slowing the euro’s steady rise. The dollar bucked the trend against the yen, rising nearly 1 percent to 115.25 yen on the yen. The Swiss franc failed to get much mileage out of the move, though, and was last down 0.2 percent at 1.1866 per dollar. The Canadian dollar hit a 30-year high at C$1.0313 per US dollar as oil prices continued to surge. The pound held flat at $2.0285 versus the dollar which hit a 15-year low against a basket of major currencies for the fifth consecutive day as investors braced for an expected US rate cut next week.

At the close of the week on September 14, the dollar held just above a 15-year low against a basket of currencies as investors awaited data on US retail sales for clues on whether the housing market troubles are hurting the economy further. The yen slipped and stayed weak against most higher-yielding currencies as the broad rise in regional stock indexes along with signs of calmer conditions in credit markets made investors comfortable holding risky positions such as carry trades.

The dollar was flat from late US trade near 115.00 yen after climbing as high as 115.50 yen the previous day, well off the 14-month low of 111.60 yen hit last month. The single European currency barely budged near $1.3870 after striking $1.3930 a day earlier, the highest since its launch in 1999. Sterling hit a 14-month low against the euro and fell versus the dollar, hit by news that a major UK mortgage lender had become a casualty of the credit squeeze sparked by the US subprime woes. It was down half a percent at $2.0122, around one-week lows.