THE RUPEE: all round sliding trend

KARACHI: The rupee, despite being under pressure due to heavy payments by importers, somehow managed to reduce losses against dollar during the week ended on June 13, 2009. On the interbank market, the rupee lost 30 paisa against dollar for buying and selling at 81.05 and 81.10.

On the open market, the rupee followed same trend, shedding 10 paisa versus dollar for buying and selling at 81.00 and 81.20, and losing 50 paisa in relation to euro for buying and selling at Rs 113.00 and Rs 114.00. High demand for dollars made the rupee unable to keep its level firm versus both the US and European currencies. It looked that the rupee would not retain its firmness in the near future due to importers' hectic buying to clear payments yet it may resist sharp losses. According to State Bank of Pakistan (SBP) weekly data, foreign exchange reserves were down by 9.8 million dollars to 11.5 billion dollars.

INTERBANK MARKET RATE: On Monday, the rupee, despite being under pressure due to heavy payments before the end of the outgoing fiscal year, gained five paisa against dollar for buying and selling at 80.75 and 80.80. On Tuesday, strong demand for dollars pushed the rupee down which lost 25 paisa for buying and selling at 81.00 and 81.05.

On Wednesday, the rupee drifted lower by 5 paisa in terms of dollar for buying and selling at 81.05 and 81.10. On Thursday, the rupee managed to gain 25 paisa against dollar for buying and selling at 80.80 and 80.85. On Friday, the rupee dropped sharply by 20 paisa versus dollar for buying at 81.00 and 17 paisa for selling at 81.02. On Saturday, the rupee shed five paisa versus dollar for buying at 81.05 and 8 paisa for selling at 81.10.

OVERSEAS OUTLOOK FOR DOLLARS: In the first Asian trade, the dollar rose against a basket of currencies extending sharp gains made late last week as US Treasury yields rose to seven month highs, prompting investors to cover short-dollar positions.

Smaller-than-expected job losses in the United States in May sparked concerns on Friday that the Federal Reserve may lift interest rates sooner than previously thought, helping push up Treasury yields. In the second Asian trade, the dollar rose against a basket of currencies but stayed below a two-week high scaled after US jobs data last week stoked expectations for a Federal Reserve rate rise later this year.

The euro dipped but stayed above lows hit on Monday, when ratings agency Standard & Poor's cut Ireland's sovereign credit rating to AA, its second downgrade in three months.

Amid third Asian trade, the dollar was steady against a basket of currencies after sliding the previous day when investors questioned whether the economy had improved enough to justify talk of a Federal Reserve rate hike by the year-end. The dollar rose against the yen as traders cited regional players actively covering short positions with Asian shares extending gains in early trade.

In the fourth session of the Asian trade, the dollar fell against a basket of currencies, paring some gains made after the benchmark US Treasury yield hit its highest point in eight months the previous day.

In the fifth session of the Asian trade, the dollar was steady against other major currencies after falling the previous day when improved US labour market and retail sales figures boosted optimism about the economy, eroding the dollar's allure as a safe haven.

At the week-end, the US dollar rose broadly in New York, rebounding from a sell-off earlier this week, while demand for the euro fell after data showed a plunge in euro zone industrial production. The US dollar is likely to extend this week's drop in the trading week ahead as economic data fails to convince investors the US economy is recovering fast enough to warrant demand for the greenback. Despite a rally on Friday, this week's record auction of $65 billion of Treasury debt and burgeoning fears of inflation are also prompting investor caution on the dollar as they feel they are in uncharted waters regarding US fiscal policy.

Rhetoric about finding a new global reserve currency to challenge the greenback is another slight weight on the dollar before a meeting in Russia of BRIC nations Brazil, Russia, India and China.

OPEN MARKET RATES: On June 8, the rupee shed 10 paisa in terms of dollar for buying at 80.90 while it did not show any change for selling at 81.10. The rupee managed to hold the weekend levels versus euro for buying and selling at Rs 112.50 and 113.50.

On June 9, the rupee managed to hold its overnight levels against dollar for buying and selling at 80.90 and 81.10. The rupee managed to gain Re one in relation to euro for buying and selling at Rs 111.50 and 112.50. On June 10, the rupee shed 5 paisa against dollar for buying and selling at 80.95 and 81.15. The rupee shed Rs 1.60 versus euro to Rs 113.10 and Rs 114.10.

On June 11, the rupee inched up 5 paisa in relation to dollar for buying and selling at 80.90 and 81.10. The rupee adopted the same pattern versus the euro, gaining 60 paisa for buying and selling at Rs 112.50 and Rs 113.50.

On June 12, the rupee shed 5 paisa for buying against dollar for buying at 80.95 while it did not show any change for selling at the overnight level at 81.10. The rupee, however, lost 50 paisa for buying at Rs 113.00 and 114.00. On June 13, the rupee was down by 5 paisa against dollar for buying 81.00 and 10 paisa for selling at 81.20. The rupee rose 30 paisa in relation to the euro for buying and selling at Rs 113.00 and Rs 114.00.


(BRecorder)