The rupee in the local market managed to show strength over the dollar and euro this week. The demand was low but there was easy supply of dollar as a result of tough measures taken by the State Bank of Pakistan to curb speculative trading.

However, the foreign investors are still reluctant to invest in the equity market due to political uncertainty and negative reports regarding country’s stock markets. During July-October there was massive outflow from the equity market, which posted a decline of 156 per cent in portfolio investment.

At the same time falling trend in foreign exchange reserves continues. This is still exerting pressure on the rupee. Many analysts hope, the situation will improve in coming days once the aid from the IMF and the Friends of Pakistan start coming in. The rupee at present seems to have regained strength over the happy news pouring in since past few days.

In the inter-bank market, the rupee/dollar parity firmness persisted on the opening day of the week in review, as the rupee managed to post fresh gains on November 17, sharply gaining 40 paisa on the buying counter and 35 paisa on the selling counter to trade at Rs79.80 and Rs79.90 against last week at Rs80.20 and Rs80.25.

The upward rising trend continued on the second day, with the rupee further extending its overnight gains by 40 paisa on the buying counter and 45 paisa on the selling counter.

The dollar traded at Rs79.40 and Rs79.45.on November 18. On November 19, the rupee/dollar parity showed stable trend, as it traded unchanged at its overnight levels. On November 20, however, the rupee inched up by 5 paisa against the dollar, which traded at Rs79.35 and Rs79.40 on improved dollar inflows. On November 21, the rupee further gained 10 paisa on its overnight levels and traded at Rs79.25 and Rs79.30 due to easy dollar supply. During the week, the rupee in the inter-bank market managed to improve sharply against the dollar by recovering up to 60

paisa over its previous week close.

In the open market, the rupee maintained its firmness versus the dollar on the opening day of the week in review, as it managed to gain 100 paisa on its last week close of Rs79.50 and Rs80 to trade at Rs78.50 and Rs79 on November 17. It further recovered 50 paisa on the buying counter but retained its overnight level on the selling counter on the second trading day, changing hands versus the dollar at Rs78 and Rs79 on November 18.

On November 19, the rupee moved both ways as it remained stable versus dollar on the buying counter but managed to gain 50 paisa on selling counter, changing hands at Rs78 and Rs78.50. It, however, did not show any change on the buying counter for the third day in a row but shed 50 paisa on the selling counter on November 20, changing hands versus the dollar at Rs78 and Rs79.

On November 21, the weakening trend in the rupee/dollar parity persisted for the second day. The rupee lost 20 paisa on the buying counter but maintained its overnight level on the selling counter. At the close of the day, the dollar was at Rs78.20 and Rs79.00. This week, the rupee in the open market, the rupee managed to show strength over the American currency by gaining 130 paisa on the buying counter and another 100 paisa on the selling counter.

Versus the European single common currency, the rupee continued to display strength on the opening day of the week in review as it managed to further recover 80 paisa on the buying counter and another 130 paisa on selling counter, trading at Rs99.50 and Rs100 on November 17, against last week close of Rs100.30 and Rs101.30.

On November 18, it extended further gains, recovering 125 paisa for buying and 75 paisa for selling to trade at Rs98.25 and Rs99.25. The rupee maintained its rising trend against euro for the third consecutive day on November 19, extending its overnight gains by another 25 paisa on the buying counter and 105 paisa on the selling counter, changing hands versus the euro at Rs98.00 and Rs98.20.

However, on November 20, the rupee recorded a slight fall against euro as it shed 10 paisa on buying and 90 paisa on selling to trade at Rs98.10 and Rs99.10. The rupee continued its fall versus euro for the second consecutive day on November 21, registering a decline of 60 paisa on the buying counter but it managed to pick up 10 paisa on selling counter and traded at Rs98.70 and Rs99. During the week in review, the rupee however gained 60 paisa for buying 130 paisa for selling against the European single common currency.

On the international front, the dollar fell against the Japanese yen on November 17, as weak US manufacturing data deepened worries about the global economy, and investors fretted that leaders world-wide ended a weekend meeting with few concrete proposals for dealing with this year’s downturn. In late trading, the euro was up 0.1 per cent at $1.2645. The dollar fell 0.6 per cent to 96.36 yen. The pound rose around 2 per cent against the dollar and euro, bouncing back from an all-time low against a 6 1/2-year trough versus the dollar struck last week .sterling was up 1.9 per cent against the dollar at $1.5036.

On November 18, the dollar advanced against the yen bolstered by Wall Street’s rise as an upbeat outlook from technology giant Hewlett-Packard slightly eased fears about a global slowdown. In New York trading, the dollar rose 0.9 per cent to 97.25 yen. The euro was flat against the dollar at $1.2654. Sterling ended European trading little-changed against the dollar. It was flat against the dollar at $1.5005. Last week it traded as low as $1.4555, down more than a quarter from levels above $2 seen as recently as July.

On November 19, the US dollar slipped versus the yen as worries grew about the ailing US auto industry and a record slide in US consumer prices fanned fears of a deeper recession.

The euro, meanwhile, weakened against the dollar as worries about a worsening global slowdown prompted investors to shun stocks and other risky assets for the safety of US Treasuries. In late trading, the dollar fell 1.2 per cent to 95.79 yen, while the euro fell 2.0 per cent to 119.94 yen. Sterling was little changed against the greenback at $1.4970, after trading higher for most of the session.

On November 20, the US dollar slumped versus the yen squeezed by Wall Street’s plunge as fears of a world-wide downturn that was much deeper than initially thought made investors seek shelter in the safest assets. The dollar fell as low as 93.74 per cent, a three-week low. It last traded at 94.07, down 1.9 per cent. Against the dollar, the euro slipped 0.5 per cent to $1.2458 while sterling fell 1.6 per cent to $1.4726.

The dollar rose 1.0 per cent to 1.2243 Swiss francs after the Swiss National Bank cut interest rates by a full percentage point, citing worsening economic conditions.

At the close of the week on November 21, the yen slipped from three-week highs against the dollar and euro as Asian shares rebounded sharply and Japan’s finance minister warned about market swings, prompting investors to trim their bets on the Japanese currency.

The dollar recovered from a three-week low of 93.55 yen struck the previous day, climbing to 94.82 yen, up 1.2 per cent on the day.

The European single currency climbed 0.3 per cent to $1.2535, staying above a 2-1/2 year low of $1.2329 hit in late October. The pound was up 0.9 per cent at $1.4863.