October 22, 2007	Monday	Shawwal 9, 1428

The local currency market resumed trading on October 17, after remaining closed for three days on account of Eid-ul-Fitr holidays--October 13 to October 16.

Trading activities commenced on limited scale as the market wore a holiday mood. When the inter-bank market reopened after a long weekend, there was lack of buying interest.

However, demand for dollar existed amid low dollar inflows due to long closure of the currency market. As a result the rupee weakness versus the dollar persisted on the opening day.

The rupee lost six paisa, changing hands against the dollar at Rs60.63 and Rs60.65 in the inter-bank market. It had closed last week at Rs60.57 and Rs60.59.

On October 18, the rupee/dollar parity maintained a stable trend as it traded unchanged at its overnight levels amid low trading activity.

Entire city looked busy watching return of Benazir Bhutto after eight years of self-exile on TV. The rupee traded at Rs60.63 and Rs60.65.

On October 19, the rupee showed one paisa rise against the dollar, amid low trade. Entire city remained disturb after bomb blast in Benazir’s procession, which resulted in several casualties.

Trading activities were almost standstill. The dollar traded at Rs60.62 and Rs60.64

In the open market, the rupee managed to gain two paisa against dollar after the market resumed trading on October 17.

The dollar was seen changing hands at Rs60.63 and Rs60.68, after trading last week at Rs60.61 and Rs60.66.

However, on the following two days, trading in the open market remained suspended as the city life was disturbed after the return of Benazir after eight years of self exile.

The Forex Association of Pakistan (FAP) did not issue its release on October 18 and October 19, as the members and workers could not reach their destination due to transport problem and the tense atmosphere after the bomb blast in the city.

Versus the European single common currency, the rupee shed three paisa when trading resumed on limited scale after three day closure of currency market on account of Eid holidays.

The rupee, however, traded at Rs85.35 and Rs85.45 on October 17, as against Rs85.32 and Rs85.42 last week.

The value of rupee against dollar and euro was not available on the following two days as the market remained disturb on the return of Benazir from self exile and the bomb blast killing at least 140 people.

In the international financial markets, the dollar eased against the yen and euro on the opening day of the week, weighed down by weakness in the US stock market after comments by a top Citigroup official raised anew concerns about global credit.

The Dow Jones industrial average was down about 0.7 per cent at the end of the trading day. Citigroup Inc and other global banks earlier said they were pooling money to prevent investment funds from having to dump assets into the market.

The news initially lifted stocks, but shares later fell as the move reawakened concerns about the fallout from the credit squeeze.

The yen, fell in response to firmer equities earlier, and the dollar hit a peak of 117.94 yen, its highest since mid-August.

But the dollar slipped against the yen as stocks dropped to trade at 117.26 yen, down 0.3 per cent on October 15.

Also weighing on the dollar against the yen was the surge in oil prices, which jumped to an all-time high above $86 per barrel.

Oil prices were propelled by strong demand from booming commodity markets. The euro rose 0.2 per cent to $1.4202, not far from its record high above $1.4280 set two weeks ago.

On October 16, the dollar rose and high-yielding currencies such as the New Zealand dollar fell against the yen as investors grew wary of risky trades amid a sell-off in global equities and a surge in oil prices.

The dollar initially sold off after a report showed a record net capital outflow in August, but recouped some of its losses.

The yen also gained broadly, with investors selling high-yielding assets funded by the currency’s cheap rates in carry trades.

The dollar fell 0.6 per cent to 116.65 yen. The euro plunged 0.9 per cent to 165.32 yen.

The high-yielding Australian dollar slid 2.2 per cent to 103.35 yen, while the New Zealand dollar sank more than 3 percent to 86.74 yen.

Both falls were a reflection of the current risk-averse environment. The euro traded 0.3 per cent lower against the dollar at $1.4167.

Against a basket of currencies, the dollar was up 0.2 per cent at 78.224, moving further away from a record low of 77.660 hit earlier this month.

Sterling was down 0.4 per cent on the day against the dollar at $2.0347, and the euro was up 0.1 per cent at 69.63 pence. The pound was down 1 percent versus the ultra low-yielding yen at 237.49 yen.

On October 17, the dollar slipped broadly hurt by a sharp fall in US housing starts for September and a surge in crude oil prices amid mounting geopolitical tensions.

A weaker housing market and a slowing US economy has enhanced the chances of Federal Reserve policy-makers cutting benchmark interest rates again from the current 4.75 per cent, which should diminish the dollar’s appeal to global investors. Fed officials next meet on October 30-31.

In late trading in New York, the euro was 0.2 per cent higher at $1.4191. Against the yen, the US currency reversed earlier gains, falling 0.2 per cent to 116.70.

The pound initially fell after the minutes showed that one Monetary Policy Committee member voted for a rate cut this month.

However sterling’s losses were reversed as investors turned their attention to stronger-than-expected wage data released at the same time Sterling added 0.4 per cent to $2.0394, tracking euro/dollar higher.

On October 18, the dollar fell to a record low against the euro and a basket of currencies pressured by soft US economic data and sluggish corporate earnings that bolstered chances of an interest rate cut.

It also strengthened the case for a cut in the target federal funds rate from the current 4.75 per cent to avert a sharper slowdown.

Earlier in the session, higher-than-expected initial weekly US jobless claims also gave the dollar a negative tone.

In late trading, the euro was up around 0.6 percent on the day at $1.4294, after climbing to a lifetime peak at $1.4310 in the opening hours of the New York session, according to Reuters data.

The yen, on the other hand, gained as investors became more risk-averse and unwound carry trades in which they buy high-yielding currencies funded by borrowing low-yielders such as the yen.

It was the yen’s fourth straight day of gains against the dollar, the longest streak since the four days leading up to the Fed’s surprise half-percentage-point cut in the discount rate, at which it lends to banks, on August 17.

The dollar was 0.8 per cent weaker at 115.68 yen, near an earlier two-week low. The euro fell 0.2 per cent against the yen to 165.37 yen.

The dollar was already weak before the release of the Bank of America’s earnings, still reeling from the effects of weak housing data the previous session.

Sterling rose to a near three-month high against the. It rose as high as $2.0513, its strongest since late July and closing in on 26-year peaks of $2.0655.

At the close of the week on October 19, the euro hit a record high against the dollar.

The single currency climbed to $1.4320, and the growing view for lower US rates also drove the dollar to a record low versus a basket of major currencies and a three-week low against the yen.

A slide in Asian equities offered a broad boost to the yen, as it pointed to an ebbing of risk appetite and encouraged unwinding of risky bets against the low-yielding Japanese currency.

The dollar fell 0.45 per cent to 114.88 yen, its lowest since early October.

The New Zealand dollar dropped 1.1 per cent at one point, while the Australian dollar fell 0.8 percent.

Sterling hit a two-month high versus the dollar and rallied versus the euro after stronger-than-expected British growth figures dimmed expectations of an imminent interest rate cut from the Bank of England.

The pound was up 0.2 per cent versus the dollar at $2.0486, having touched its highest level since late July.