In the open market, the rupee lost one percent or Re. one against the dollar for buying and selling at 98.40 and 98.60, respectively. The national currency also came down sharply against the euro, losing Rs 3.70 for buying and selling at Rs 128.90 and Rs 129.90, respectively.
In the beginning of the week, the dollar, which was being traded within a narrow band versus the rupee during the last week, commenced on a positive note on the back of strong buying by importers ahead of the State Bank of Pakistan (SBP)'s decision, money experts said.
They said that dominating factor was expectations for rate cut in monetary policy.
There were high expectations among business circle that the move would help in an increase in business activity. As a result of sharp fall in the business activities in the country, the SBP during the out-going year bring down interest rate with gradual pace and in its December monetary policy, cut down the interest rate by 50 pasis points to 9.50.
Market sources said that the importers under pressure were trying to cover forward buying of dollar to meet the high imports payments. Commenting on the move to cut policy rate by the central bank, some experts said that in fact in a bid to please business community, the government wants to create business-friendly atmosphere in the coming days to ensure smooth win of the upcoming general elections.
But, some economists, very close to the banking sector said that there was no economic management in the country and were not serious to introduce practical measures for bringing the country out of the prevailing economic and political crises.
"We have not been able yet to finalise the gas pipeline deal with Iran, which is a very disappointing factor under the present circumstances," they added. The country desperately needed gas for development of its industrial sector. It seems that the country is heading towards dollarisation.
The rupee, which has stuck in host of bushes, is slipping down with gradual pace. It is a common perception that the rupee is coming down, but in fact, the weak fundamentals are dragging the national currency down versus the dollar.
INTER-BANK MARKET RATES: On Monday, the rupee extended it's slide in relation to the dollar, losing 18 paisa for buying at 96.90 and the national currency fell by 21 paisa for selling at 96.95.
On Tuesday, the rupee crossed an important mark of 97, after shedding 35 paisa against the dollar for buying and selling at 97.25 and 97.30, respectively. On Wednesday, the rupee recovered 5 paisa against the dollar for buying at 97.20 and it gained eight paisa for selling at 97.22. On Thursday, the rupee failed to resist more erosion against the dollar, losing 20 paisa for buying and selling at 97.40 and 97.42, respectively. On Friday, the rupee continued its slide in relation to the dollar, losing 25 paisa for buying at 97.65 and 28 paisa for selling at 97.70.
OPEN MARKET RATES: On December 10, the rupee, in sympathy with the interbank market track, depreciated by 20 paisa in terms of the dollar for buying and selling at 97.40 and 97.60, respectively. The rupee also lost same amount versus the euro for buying and selling at Rs 125.20 and Rs 126.20, respectively.
On December 11, the rupee fell by 15 paisa in terms of the dollar for buying and selling at 97.55 and 97.75, respectively. The rupee also shed 50 paisa versus the euro for buying and selling at Rs 125.70 and Rs 126.70, respectively. On December 12, the rupee, however, shed 5 paisa against the dollar for buying and selling at 97.60 and 97.80, respectively.
The rupee also lost 80 paisa versus the euro for buying and selling at Rs 126.50 and Rs 127.50, respectively. On December 13, the rupee was down by 40 paisa in terms of the dollar for buying and selling at 98.00 and 98.20, respectively. The rupee also lost 80 paisa versus the euro for buying and selling at Rs 128.20 and Rs 129.20, respectively. On December 14, the rupee fell by 20 paisa in relation to the dollar for buying and selling at 98.40 and 98.60, respectively.
The rupee continued its slide against the dollar on the currency market on Saturday in the process of slow business due to law and order situation in the city, money experts said. The dollar showed strength versus the rupee but it looks that the rupee may not face further sharp fall due to costlier import payment, they said.
Commenting on the rate cut, currency analysts said that this move would help revive the business activities in the country, which are coming down due to lack of basic facilities. Particularly, the private sector is happy over the move, but traders say the 50-basis point cut in the mark-up rate is insufficient, demanding further reduction to bring it down to 8 percent.
They said that the cut is meagre and half-hearted attempt to bring the economy on track. The central bank should reduce the mark up to 8 percent as the current cut will hardly improve the local investment scenario.
Many in the money market were expecting an increase in business activities after the SBP move.
WORLD VALUE OF DOLLAR: In the first Asian session, the euro flirted with two-week lows against the dollar after Italian Prime Minister Mario Monti offered to resign, raising political uncertainty over who will lead the euro zone's third-biggest economy. The single currency was also undermined by the prospect of a recession in Germany and expectations of a future rate cut by the European Central Bank (ECB). Inter bank buy/sell rates for the taka against the dollar on Monday 80.90-80.95 (previous 80.95-81.00). Call Money Rates: 07.75-08.00 percent (previous 06.05-08.75 percent). The dollar was trading against the Indian rupee at Rs 54.31, the greenback was at 3.0565 in terms of the Malaysian ringgit and the US currency 6.2293.
In the second Asian trade, the euro hovered above two-week lows on Tuesday as nerves calmed over Italy's latest political turmoil for now and as prospects of more stimulus from the Federal Reserve pinned down the dollar.
Expectations that the Fed will announce fresh easing steps on Wednesday also lifted high-yielding currencies against the dollar, boosting the Canadian dollar to a two-month high and the New Zealand dollar to a nine-month high. In the third Asian trade, the dollar wallowed at three-month lows against the Australian currency and remained broadly under pressure as markets geared up for more stimulus from the Federal Reserve.
The dollar index fell 0.3 percent to 80.061 as the euro popped back above $1.3000, pulling away from a two-week low around $1.2876 plumbed Friday. The single currency was last at $1.30030, having retraced 50 percent of its December 5-7 fall from $1.3127 to $1.2876.
The dollar was trading against the Indian rupee at Rs 54.26, the greenback was at 3.0530 in terms of the Malaysian ringgit and the US currency was at 6.2379 in relation to the Chinese yuan. Inter bank buy/sell rates for the taka against the dollar on Wednesday. 80.60-80.65 (previous 80.80-80.80). Call Money Rates: 07.75-08.00 percent (previous 07.00-08.75 percent).
In the fourth Asian trade, the dollar was on defensive after the US Federal Reserve unveiled a fresh bond-buying stimulus programme but the yen languished at nine-month lows against the US currency on expectations of more money printing in Japan.
The Fed surprised markets by explicitly linking its policy path to unemployment and inflation but that had little immediate impact because the Fed's latest economic projections suggested no change in its previous pledge to keep rates near zero until mid-2015.
The dollar was trading against the Indian rupee at Rs 54.22, the greenback was at 3.0480 in terms of the Malaysian ringgit and the US currency was available at 6.2400 in relation to the Chinese yuan. Inter bank buy/sell rates for the taka against the dollar on Thursday. 80.45-80.50 (previous 80.60-80.65). Call Money Rates: 08.00-10.75 percent (previous 07.05-08.75 percent).--
In the final Asian trade, the yen slipped to nine-month lows on Friday as Japan looks set to get a prime minister keen to push for more money printing by the central bank to stimulate the moribund economy.
Japanese media reported that conservative Liberal Democratic Party (LDP) is set for a stunning victory in elections on Sunday, cementing speculation that LDP leader Shinzo Abe will be in a strong position to push for bold monetary easing.
The dollar was trading against the Indian rupee at Rs 54.46, versus the Malaysian ringgit, the US currency was at 3.0548 and the greenback was at 6.2376 versus the Chinese yuan.
At the weekend, the dollar fell from a near nine-month high against the yen and dropped for the fifth straight day against the euro on Friday after a US report on inflation showed prices fell in November for the first time in six months, which should allow the Federal Reserve to stay on its ultra-easy monetary policy path.
The Labour Department said on Friday its Consumer Price Index dropped 0.3 percent last month as a sharp decline in gasoline prices offset increases in other areas. It was also the largest drop since May and followed a 0.1 percent gain in October.