THE RUPEE: weak trend

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SOURCEBusiness Recorder
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The rupee drifted further lower against the dollar on the money market during the week, ended on April 06, 2019. The rupee almost dropped 40 paisas in terms of the dollar for buying and selling at Rs 141.30 and Rs 141.32.

OPEN MARKET RATES INTER-BANK MARKET RATES: the rupee shed 20 paisas in relation to the dollar for buying and selling at Rs 142.30 and Rs 142.80. The rupee also picked up 20 paisas versus the euro for buying and selling at Rs 160.00 and Rs 161.80.

Commenting on the latest decline in the rupee’s value, some marketmen said that strong demand for dollars, pushed the rates of all commodities sharply higher. Whereas, finance minister last week ruled out a further devaluation of the rupee, which has lost about 25 percent of its value over the past year. He insisted that people should refrain from purchasing of dollars as a save haven, urging them to invest in the stock market.

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INTER-BANK MARKET RATES: On Monday, the rupee shed 11 paisas in terms of the dollar for buying and selling at Rs 140.89 and Rs 140.91. On Tuesday, the rupee declined further, losing 20 paisas in terms of the dollar for buying and selling at Rs 141.09 and Rs 141.10. On Wednesday, the rupee dropped by 30 paisas in terms of the dollar for buying and selling at Rs 141.39 and Rs 141.40.

On Thursday, the rupee almost maintained overnight levels in terms of the dollar for buying and selling at Rs 141.39 and Rs 141.40. On Friday, the rupee rose by eight paisas in terms of the dollar for buying and selling at Rs 141.30 and Rs 141.32, they said.

OPEN MARKET RATES: On April 1st, the rupee was unchanged versus the dollar for buying at Rs 142.00 while it lost 20 paisas for selling at Rs 142.70, they said. The rupee also fell by 30 paisas in terms of the euro for buying and selling at Rs 158.80 and Rs 160.60, they said.

Also Read: SBP official rules out further depreciation of rupee

On April 2nd, the rupee was unchanged versus the dollar for buying at Rs 142.00 while it gained 20 paisas for selling at Rs 142.50, they said. The rupee also rose by 10 paisas versus the euro for buying and selling at Rs 158.70 and Rs 160.50, they said. On April 3rd, the rupee fell sharply by 50 paisas in relation to the dollar for buying and selling at Rs 142.50 and Rs 143.00. The rupee also depreciated by Rs 1.10 versus the euro for buying and selling at Rs 159.80 and Rs 161.00.

On April 4th, the rupee almost held the last levels in relation to the dollar for buying and selling at Rs 142.50 and Rs 143.00, they said. The rupee fell sharply versus the euro for buying and selling at Rs 161.00 and Rs 162.80, they said. On April 5, the rupee was inert versus the dollar for buying and selling at Rs 142.50 and Rs 143.00, they said. The rupee gained sharply versus the euro for buying and selling at Rs 160.30 and Rs 162.10. On April 6, the rupee gained 20 paisas in relation to the dollar for buying and selling at Rs 142.30 and Rs 142.80, they said. The rupee also picked up 20 paisas versus the euro for buying and selling at Rs 160.00 and Rs 161.80, they said.

OVERSEAS OUTLOOK FOR DOLLAR: In the first Asian trade, a surprise improvement in Chinese factory activity supported the yuan and Australian dollar on Monday, and provided a broader boost to global investor confidence, helping the dollar gain against the safe-haven yen.

Factory activity in China unexpectedly grew for the first time in four months in March, an official survey showed on Sunday, a sign government stimulus may be starting to take hold in the world’s second largest economy.

The official Purchasing Managers’ Index (PMI) rose to 50.5 in March from February’s three-year low of 49.2, beating economists’ median forecast of 49.5. That pushed the Australian dollar, often seen as an investment proxy for Chinese economic prospects, 0.15 percent higher to $0.7107. The Chinese yuan also gained 0.2 percent in offshore trade to 6.711 to the dollar.

The US dollar rose 0.15 percent to 110.93 yen, extending its advance from the 1-1/2-month low of 109.70 it touched a week ago. The dollar was trading against the Malaysian ringgit 4.076 and the greenback was at 6.706 in terms of the Chinese yuan. In the second Asian trade, the dollar rose to a two-week high against the yen on Tuesday as ebbing concerns about weakness in the global economy lifted US bond yields from 15-month lows.

The greenback was steady at 111.395 yen after touching 111.46, its highest since March 20. The dollar index against a basket of six major currencies added 0.1 percent to 97.336, within close reach of a three-week high of 97.392 scaled the previous day.

US Treasuries were sold and their yields had surged overnight, with the benchmark 10-year rate rising more than 8 basis points, as encouraging manufacturing data out of the United States and China spurred some investors to scale back their holdings of safe-haven bonds. The dollar was trading against the Indian rupee at Rs 69.150, the greenback was at 4.084 versus the Malaysian ringgit and the US currency was available at 6.719 in terms of the Chinese yuan.

In the third Asian trade, the yen slipped and the Australian dollar rose on Wednesday as concerns over the US-China tariff war receded further following a Financial Times report that the two sides have resolved most of the issues standing in the way of a trade deal. The yen was a touch lower at 111.455 per dollar after brushing 111.53, its weakest since March 20. The Japanese currency, a perceived safe-haven, is often sold when risk aversion abates in the broader markets.

The dollar index against a basket of six major currencies was down 0.1 percent at 97.236, having lost some traction after climbing a 3-1/2-week peak of 95.517 the previous day. The dollar was trading against the Indian rupee at Rs 68.460, the greenback was at 4.079 versus the Malaysian ringgit and the US currency was at 6.709 in terms of the Chinese yuan.

In the fourth Asian trade, the yen eased and the euro held firm to the dollar on Thursday as hopes of a trade deal between the United States and China lifted risk appetite globally, while the sterling gained after the UK parliament approved legislation to seek a Brexit delay.

The safe-haven yen touched a two-week low of 111.575 yen against the dollar late on Wednesday. The pair was last quoted at 111.42 yen, little changed on the day. The euro was up 0.1 percent to the US dollar at $1.1240. The single currency had fallen to its lowest levels in more than three weeks on Tuesday and neared $1.1177, which, if broken, would send the currency to its weakest level since June 2017.

Trade talks between the United States and China made “good headway” last week in Beijing and the two sides aim to bridge differences during talks that could extend beyond three days this week, White House economic adviser Larry Kudlow said. The dollar was available against the Indian rupee at Rs 68.730, the greenback was at 4.078 in terms of the Malaysian ringgit and the US currency was at 6.715 in relation to the Chinese yuan.

In the final US trade, the dollar rose on Friday after a jobs report for March showed than US job gains were better than expected during the month while wage pressures were muted. Non-farm payrolls rose by 196,000 jobs last month. Data for February was revised modestly up to show payrolls rising by 33,000 jobs instead of the previously reported 20,000. February job gains were the smallest since September 2017.

Wage gains also slowed in March and more people dropped out of the labour force. Average hourly earnings increased by four cents, or 0.1 percent in March after jumping 0.4 percent in February.

(This news/article originally appeared in Business Recorder on April 8th, 2019)

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