Weekly Currency Roundup

October 4th -October 8th, 2009
International Markets
The US dollar continued to take a beating this week. Fueled by a pick up in global investor sentiment, as well as continued speculation on countries moving away from the dollar as the primary reserve currency continued to weigh down the dollar, and reaffirmed its long term downtrend.
There was also a news report on the US dollar being replaced as the currency for oil trade. This further hit the dollar. The dollar weakened on Thursday after strong Australian jobs data sent the Australian dollar sharply higher and an upbeat US corporate earnings report fuelled investor demand for higher risk and yield at the expense of the greenback.
Australian data beat expectations for a fall in jobs in September, with 40,600 positions created instead, pushing the Aussie to a 14-month high against the US currency as markets anticipated more interest rate hikes to come. On Tuesday, the RBA became the first central bank in the Group of 20 to raise its cash rate in this cycle.
The move led to a general improvement in risk appetite and made leveraged carry trades even more attractive. On the other hand, US interest rates are set to remain anchored at record lows well into next year, making the dollar a possible funding currency for higher-yielding assets. On the other hand, US interest rates are set to remain anchored at record lows well into next year, making the dollar a possible funding currency for higher-yielding assets

Local Money Market
The call money rate traded in the range of .5% the week. The market was flooded with liquidity after the maturity of bills the previous week, and rates remained very low.

Local Market FX
The USD remained steady against the BDT this week. The market was active and there was ample liquidity.

-- Standard Chartered Bank