Weekly Currency Roundup

March 28- April 1, 2004

Local FX Market:
US dollar was volatile this week. Increased demand for greenback for import payments and profit remittances made the dollar stronger against Bangladeshi taka in the beginning of the week. By the end of the week, it eased slightly due to higher supply.

Money Market:
Bangladesh Bank borrowed BDT 4,940.00 million by the Treasury bill auction held on Sunday, compared with BDT 2,325.00 million in the previous week's bid. The weighted average yields of t-bill of different tenors were almost unchanged.

The call money rate was stable this week. Call money rate ranged between 4.00 and 4.50 percent in the beginning of the week. The rate steadied since then and ended the week at 3.50 and 4.25 percent.

International FX Market:
In the beginning of the week, the yen rose as a newspaper report suggested intervention to curb its gains had officially ceased, while the Euro fell as speculation increased of a cut in official Euro-zone interest rates this week. Japanese officials denied the Times of London report that Japan had ended its drive to weaken the yen, which was based on a Bank of Japan source, saying their currency policy was unchanged. The report sent the yen to six-week highs on the dollar before the Ministry of Finance (MoF) reminded markets it controls currency policy and would continue intervening as needed.

In the middle of the week, the yen jumped over 1.5 percent against the dollar to four-year highs on Wednesday on optimism over the Japanese economy and a perception Japan is using less firepower to curb its currency. The yen rose at breakneck speed after hurdling 105 yen per dollar, previously considered a line in the sand for Japanese authorities, which have spent 30 trillion yen in the past year in an attempt to curb the yen's potentially export-damaging strength. Euro meanwhile rose to one-week highs against the dollar as investors scaled back expectations for the European Central Bank to cut interest rates on Thursday.

By the end of the week, Euro reversed early losses to hit one-week highs against the dollar on Thursday, as upbeat Euro-zone manufacturing data removed lingering talk of a Euro-zone rate cut later in the day. ECB releases its monthly policy decision at 1145 GMT. The yen hovered near the previous day's four-year high against the dollar and four-month high against the euro after a survey showed more upbeat outlook on Japanese business.

-- Standard Chartered Bank