THE Pakistani rupee moved slightly in the inter-bank market, from Rs59.44 and Rs59.46 for buying/selling on the first day of the week to Rs59.46 and Rs59.47 on April 28. On the following day the rupee continued its gradual fall against the dollar, falling to Rs59.47 and Rs59.48 for buying and selling. Analysts attribute this to importers’ demand for dollar. There was some marginal increase in the demand for dollars. However, the steady supply of dollars by the State Bank saved the currency from any sharp falls. On the first day of last week, in the open market, the rupee lost five paisa against the dollar for buying at Rs59.95 but maintained its weekend level for selling at Rs60.0. On April 29, in the open market, the Pak rupee managed to hold on to its firmness against the dollar for buying and selling at Rs59.95 and Rs60.00.

On April 27, the euro lost ground against the rupee for buying and selling at Rs77.25 and Rs77.55. On the following day it shed ten paisa for buying and selling at Rs77.35 and Rs77.65 respectively. On April 29, the rupee had shed another 15 paisa against the euro for buying and selling at Rs77.50 and Rs77.80 respectively.

On the opening day of last week, in the Tokyo market, the dollar staged a mild recovery after hitting a one month low against the yen on fresh speculation. China would soon allow the yuan to rise, move that analysts say would boost other Asian currencies. A revaluation or relaxing of the 8.28 yuan peg to the dollar is widely expected to cause an appreciation of the Chinese currency and spark a broad rally in Asian currencies. Buying yen has been a popular and easy bet on a near-term move by China, and investors and speculators have snapped up the Japanese currency since US officials stepped up calls a week earlier for China to act on its currency. The dollar fell to a one-month low of 105.26 yen.

On April 26, the yen surged to a two month high against the euro and a one month high against the dollar, as speculation intensified that China might soon revalue its currency. The euro was the biggest loser. In late New York trade, the euro zone currency was at 137.27 yen, not for above a two-month low and down about 0.9 percent from on April 22. Any revaluation of the yuan would likely boost currencies of China’s Asian trading partners, including Japan, whose exporters would benefit from a higher yuan.

But the market’s main focus was on the Chinese yuan, which has been pegged near 8.28 to the dollar for the last decade. Buying yen is a poplar proxy bet on a near-term move by China to make its currency regime more flexible, and investors have snapped up the Japanese currency since US officials last week stepped up calls for China to unlink its currency. If China’s yuan rose against the dollar, that would allow other Asian central banks to relax efforts to artificially weaken their currencies against the dollar and still keep their exports competitive with China’s.

Against the dollar, the euro was down 0.5 per cent at $1.2993. The dollar fell to a one-month low around 105.46 yen in Asia according to Reuters data then recovered slightly to 105.65 yen. On April 27, in the New York market, the euro was at around $1.2977, down by about 0.2 per cent from a day earlier. Against the yen, the dollar retraced some of its losses rising by around 0.3 per cent to 106.0 yen.

Some analysts expect the pace of US economic expansion will slow during 2005 as higher interest rates and energy prices take their toll on consumer spending. At least for now, the housing data put to rest concerns that US economic growth was ebbing just as inflation was picking up. But the dollar’s near-term direction will likely be affected by US first-quarter gross domestic product growth and the March personal consumption expenditure index. Meanwhile in the London market, on April 27, the dollar rose to one week highs against the euro and Swiss franc after data showed new US home sales hitting a record pace, easing recent worries about a soft patch in the world’s largest economy.

The dollar has risen more than 1.5 per cent against the euro from one-month lows hit a week earlier week, gaining ground on renewed optimism on the US economy. The dollar was slightly higher at 106.20 yen, almost a full yen above one-month lows struck on April 25. The euro was trading around 137.225 yen, after falling to a two-month low around 137 yen on April 22. This year the dollar has drawn support from expectations the Federal Reserve will keep raising interest rates at the measured pace it promised.

In the New York market, the dollar rebounded against the euro on April 27, after losing ground earlier due to a soft report on US durable goods orders, as currency investors focused on the even weaker state of the euro zone economy. The dollar initially lost some ground against the euro after US durable goods orders fell 2.8 per cent in March compared with a downwardly revised decline of 0.2 per cent in February and confounded expectations for a rise of 0.3 per cent. A key component of the report — non-defence capital goods orders excluding aircraft equipment — dropped 4.7 per cent in March compared with a fall of 2.5 per cent in February.

In the London market, the dollar steadied against major currencies as markets looked to first quarter US growth data for more clues on the US economy. The yen, meanwhile, hit a 2-1/2 month high against the euro after the Bank of Japan forecast the end of deflation in a year’s time. The US economy is expected to have slowed down slightly from the previous three months but still above its assumed long-run growth potential worries about the US economy knocked the dollar to one-month lows against the euro a week earlier but more upbeat data has helped the dollar to recover in recent days.

In the New York market, the dollar edged higher against the euro on April 29, as the market tentatively decided that the prospect of higher US interest rates outweighed slower than expected US growth in the first quarter and signs of rising inflation.

A considerable rise in first-quarter inflation fuelled expectations the Federal Reserve might quicken the pace of US interest rate rises, enhancing the allure of dollar-denominated assets for foreign investors. This helped offset the market’s disappointment over 3.1 per cent annualized economic growth in the quarter, below forecasts of 3.6 per cent and the slowest quarterly growth rate in two years.

The fact that US growth came in below expectations did not bother foreign exchange market participants much as most dealers were prepared for soft US GDP numbers anyway. Against the yen, the dollar rose slightly to 106.03 yen. The dollar was also higher against the Swiss franc at 1.1935 francs. Sterling was flat at around $1.9063.

In the London market the yen hit a five-week high against the dollar and 2-1/2 month peak versus the euro on April 29 as speculation mounted that China was ready to revalue its pegged yuan currency soon.

China’s state-run China Securities Journal fanned new talk of an imminent revaluation by saying that deepening reforms of commercial banks and the FX market have created conditions for the country to adjust the yuan. The yen which is seen as a proxy trade for the yuan, still gained, rising one per cent on the day against the dollar.