Committed to PEOPLE'S RIGHT TO KNOW
Vol. 5 Num 926 Sat. January 06, 2007  
   
Business


Weekly Currency Roundup
January 03-January 4, 2007

Local FX Market
Demand for US dollar was stable in throughout the week and USD rose slightly against Bangladeshi taka.

Overnight money market was steady throughout the week. The call money rate remained unchanged throughout the week and ranged between 6.50 and 7.00 percent.

International FX Market
The year began as the yet hit a record low against the euro and a two-month low against the US dollar on Wednesday as the hunt for the yield dominated sentiment ahead of US data that could give clues on the direction of US interest rates. Carry plays, using low yielding currencies such as the yen to fun purchases of units with more attractive interest rates, were major factor behind the euro's pulse higher, analysts said. Euro hit successive record highs against the yen in recent weeks, as investors look for a quicker pace or monetary tightening in the Euro Zone than in Japan.

The week ended as the dollar built on the previous day's gains versus other major currencies on Thursday, with investors looking to see if key data on jobs and the service sector matches a pick up in US manufacturing. The euro held near record peaks versus the yen ahead of an assortment of euro zone numbers which could provide clues on how much further interest rates are likely to rise this year. The dollar had rallied on Wednesday, hitting 2-1/2 month peaks versus the yen, after the institute for Supply Management reported a surprise expansion in US manufacturing in December, reinforcing expectations for a soft landing in the economy. The dollar was steady against they yen, down from Wednesday's 2-1/2 month peak. The euro was down 0.25 per cent against the dollar, after falling 0.9 per cent a day earlier, its biggest one-day decline since the middle of last July. The euro was slightly lower on the day against the yen after hitting a record high above 158 yen on Wednesday. The yen continued to look vulnerable after also having fallen to fresh eight-year lows against sterling and nine-year lows versus the Australian dollar this week, dragged down versus the Australian dollar this week, dragged down by its low-yielding status. Even if the BOJ boosts rates this month from 0.25 per cent, the yen's weak trend is unlikely to be reversed, traders and analysts said, adding any subsequent hikes would probably be made only gradually.

- Standard Chartered Bank