Weekly Currency Roundup
June 10-June 14, 2007
Local FX Market
The demand for US dollar was stable in the week. There was ample liquidity in the market, and the dollar remained steady against the Bangladeshi Taka and declining slightly this week.Money Market
Overnight money market was stable this week. The call money rate was ranged a little high at the beginning of the week, but declined later in the week. Most of the deals ranged between 6.60 and 6.75 percent at the end of the week. Int'l FX Market
This week the US dollar gained clawed back it losses again its major rivals, backed by rising yields of US Treasury bills which drew investors to invest in search of higher returns. The yen fell back against its a basket of major currencies as the Bank of Japan's low rates encouraged investors to continue to fund their carry trades with the yen. The other highlight of the week was the major fall of the New Zealand dollar from a 22-year high against the US dollar, after the Reserve Bank of New Zealand sold the kiwi dollar to curb the bullish trend. US dollar
The US dollar gained ground against its major rivals, reaching a 11-week high against the euro and a 4 and a half year high against the yen. The recovery of the dollar was mainly because of a rising yield of US Treasury bills, which drew investors looking for higher returns. Benchmark Treasury yields moved nearly quarter of a percentage last week, making US debt more attractive to US and foreign buyers, and reduced expectations of a rate cut later this year. Data also showed that US trade deficit has reduced in April and that the economy is recovering. Euro
The euro hit a 11-week low against the dollar and remained more or less steady throughout the week. The ECB had raised its interest rate to 4 percent as expected and there is indication of one more hike later this year. Yen
the Yen hit a 4-year low against the US dollar, as investors piled back into carry trades. The yen is used for funding investment in high yielding currencies such as the US dollar. The low interest rate of 0.5 percent is much lower than the US Fed rate of 5.25 percent, and the BOJ is set to keep the rate unchanged in its next meeting. The current low level of the yen was last seen in December 2002, when the dollar had risen as high as 125.70 yen. - Standard Chartered Bank
| 
