Vol. 4 Num 237 Sat. January 24, 2004  

Weekly Currency Roundup
January 17-January 22, 2004

Local FX Market:

Dollar remained stable against Bangladeshi taka at the beginning of the week. It remained steady throughout the week but got slightly stronger by the end of the week due to import-related payments.

Money Market:

Bangladesh Bank borrowed BDT 2,737.00 million by the Treasury bill auction held on Sunday, compared with BDT 3,239.00 million in the previous week's bid. The weighted average yields were almost unchanged. For 28-D t-bill, the yield was down by 1 bps from the previous rate to 4.05 per cent , while the yield of 5-yr t-bills was down by 2 bps to 7.97 per cent.

The call money rate was stable throughout the week resulted from a steady liquidity position of the market. The rate ranged between 3.75-4.50 percent throughout the week. By the end of the week the rate increased slightly to 4.00-4.50 percent.

International FX Market:

In the beginning of the week, US dollar was range-bound against the major currencies in thin market holiday in USA. Though dollar rose against the majors before weekend, the overall view for dollar in the market is still bullish. The attention would focus on Tuesday's full Ecofin meeting of European finance ministers, along with a European parliamentary testimony of ECB chief economist, and a World economic forum starting in Davos on Wednesday.

A week-long rally in the dollar crumbled in the middle of the week when the greenback dropped some two percent against most majors as investors retest Europe's resolve over curbing the ascent of the euro. The dollar continued to lose ground across the board on Wednesday. But the dollar was fairly steady against the yen after the Bank of Japan surprised traders by easing monetary policy just as its deflation problem appears to be improving. Monday's statement from the euro group meeting of euro zone finance ministers and the European Central Bank signaled a green light to buy back the euro after a 5-cent decline last week. Market is now focusing on the G-7 meeting just over two weeks away.

By the end of the week, euro built modest gains on the dollar on Thursday as doubts grew that finance leaders from the Group of Seven industrialised nations would unite to put a floor under the US currency when they meet in February. The yen was roughly steady at 106.76 versus the dollar and 134.94 against the euro as the specter of Bank of Japan intervention kept a lid on yen buying. Investors are now awaiting a string of public appearances by key economic policy makers over the next two days, looking for hints on how Europe, United States and Japan will act towards dollar weakness in the future.

At 1545 hours on Thursday, euro was at 1.2671/77, GBP was at 1.8382/87, and yen was at 106.65/67 against US dollar.