In the local currency market the rupee opened the week on a firm note, amid cautions trading. Dollar remained depressed while euro continued to gain strength over the rupee, amid fluctuations.
The rupee-dollar parity remained in a narrow band. No big change in dollar was witnessed in the inter-bank as well as in open market, where modest activity was observed throughout the week.
In the inter-bank market, the dollar opened the week at Rs59.29 and Rs59.30 on September 13 and closed at Rs59.26 and Rs59.27 on September 14, revealing a gain of 3 paisa for the rupee. However, a reversed situation prevailed in kerb trading where dollar traded at Rs59.10 and Rs59.15 on the opening day and at Rs59.13 and Rs59.18 on the closing day of the week, with the rupee posting a 3 paisa fall against the dollar.
The dollar in the kerb remained cheaper than in the inter-bank market, where it was 13 paisa higher. Stable foreign exchange position in Pakistan, improved the inflow of remittances from abroad and the continued dollar selling by exporters have given strength to the rupee.
Currently the demand for euro is rising. Investors are more inclined to invest in euro as it seems to be a profitable and safe investment for the time being. This week euro once again crossed Rs58 mark. It gained 35 paisa over the rupee on September 13, reflecting a 20 paisa decline for rupee from September 9 level to trade at Rs58.0 and Rs58.35. Against other major currencies on the inter-bank forex counter, the rupee slipped against the Australian dollar and remained unchanged at previous week’s close versus the Hong Kong dollar. It, however, displayed strength over the British pound, the Canadian, New Zealand and Singapore dollars, the Swiss franc, the Swedish krona, the Danish and Norwegian krones, the Japanese yen, the Chinese yuan, the Malaysian ringgit, the Kuwaiti dinar, the Saudi and Qatari riyals and the UAE dirham.
In the international financial market, the dollar edged higher on September 9 to one and two week peaks against the euro and yen, respectively, as investors continue to purchase the greenback after the US job report was less bad than expected. However, analysts said the weakness in the US stocks and the upcoming anniversary of the September 11 attacks on the United States are likely to keep many investors on the sidelines and leave the dollar range bound.
After hitting a low of 98.71 cents, the euro cut its losses and traded back to unchanged against the dollar at 98.06 cents. The yen lost ground across the board as investors viewed Japan’s plans for a new anti-deflation package as unlikely to solve the country’s deep-rooted economic problems. The dollar climbed as high as 119.30 yen before dropping back to 118.93 yen, still a gain of 0.38 per cent on the day.
The pound retreated from one-month high against the euro as the single currency clawed back across the board ahead of key political and economic events in the United States this week. Sterling showed little reaction to producer price data indicating a squeeze on manufactures’ margins developed in August - as the output prices fell and the input prices rose - as well as a narrowing of the foreign trade deficit.
The pound rose as high as 62.64 pence per euro but was back at 62.98 by the late European trade, little changed on the day. Sterling was also little changed at $1.5580, down more than a cent from last week’s five-week high.
On September 10, the dollar was broadly firmer as the growing confidence that the US economy is in better shape than either Europe’s or Japan’s helped the currency weather news that the United States was on heightened alert for terrorist attacks. A day before the one-year anniversary of the September 11 attacks on New York, Washington and Pennsylvania, the senior US officials warned of suicide attacks on the US interests in the Middle East were possible.
In late US trading, the euro was around 97.50 cents per dollar, down 0.40 per cent from the previous US close, and not far from its lows at 97.23 cents. The euro has come under pressure in recent days after the European Central Bank President dashed market hopes that the central bank would cut rates. The dollar also set two-week highs above 120 yen, lingering doubts about the US economic recovery. Upbeat comments by the Japanese prime minister about the world’s second largest economy did little to lift the market’s deep pessimism about Japan. In late new York, the greenback was up nearly 0.90 per cent on the day, changing hands around 119.90 yen not far from two-week peaks at 120.13 yen set after a series of stop loss orders were triggered in the day’s thin trading.
Sterling shed early gains to fall to fresh one-week lows against the dollar, which rallied across the board in thin trade ahead of the September 11 anniversary. The pound had fallen to $1.5516 compared with $1.5568 in late New York on September 9. On September 11, the dollar was mixed after a tepid Federal Reserve report on the US economy whittled away its gains, but trade was subdued as the Americans marked the anniversary of September 11 attacks. The dollar had crept to one-month high against the yen earlier in the session and a two-week peak versus the euro. But it drifted off its highs after the Fed said that most of the US recently had experienced slow, uneven growth. The euro was trading up 0.08 per cent at 97.51 cents, well off its lows of 97.01 cents. Against the Swiss franc, the dollar was up 0.37 per cent at 1.5027 francs, but off its two-week high of 1.5095.
Sterling hit a fresh one-week low versus the dollar as the greenback enjoyed a relief rally on hopes a the September 11 anniversary would pass without major incident and on the indications of a firmer Wall Street. Sterling fell to $1.5485, down more than half a cent from the previous day’s New York levels. Against the euro it was steady at 62.64 pence. The dollar regained a firm footing in Asia on September 12, with the operators eager to buy on dips as sentiment turned brighter after the anniversary of the September 11 attacks passed without incident. With the dollar showing relatively strong gains in recent sessions and with the anniversary having passed, dollar bulls were eagerly looking for chances to build up new long positions.
The dollar was quoted at 120.57/60 yen against previous day’s late US level of 120.39/47 yen. The euro was at 97.41/44 cents compared with 97.61/66 cents in late trade in New York, where it sank to a two-week lows of 97.01 cents. The single European currency was at 117.44/55 yen against 117.58 yen in late New York.
After watching the dollar climb quite strongly in recent sessions, the market may test a key chart level of 121.37 yen in the near term.
A dollar level of 121.37 yen is a recent high from early August. The dollar rose to a one-month high of 120.71 yen in offshore trade on September 11.
The British pound steered a steady course against the dollar as dealers digested comments from Federal Reserve Chairman Alan Greenspan and awaited a speech by President George W. Bush. Sterling stood at $1.5555 little changed from late New York levels but up almost a cent from a one-week low hit earlier on September 11. The pound was little changed against the euro at 62.80 pence.
At the close of the week, the dollar edged down versus the yen in Asia on September 13, weighed by a decline on the Wall Street as well as worrying data on the US currency account deficit and unemployment. Concerns remained about the possible US plans to attack Iraq, although some dealers said sentiment warmed a little after US President suggested he was willing to work with the United nations rather than going it alone.
The dollar’s falls were tethered also because the yen suffered from lingering pessimism over the Japanese economy, with the Japanese share prices recently dropping to 19-year lows. The dollar was at 119.80/85 yen down from the overnight late US level of 120.10/18. The dollar extended loss in late afternoon trade, dropping as low as 119.48 yen, as some speculators sold the currency to trigger stop-loss sales around 119.60. The euro was little changed at $0.9824/27 compared with $0.9822/27 in the late US trade.