Weekly Currency Roundup

November 04-November 08, 2007
Local FX Market
The US dollar/BDT market was a little tight during the week. USD gained some ground against the BDT and there was ample demand in the market throughout the week.
Money Market
Overnight money market was stable throughout the week. The call money rate ranged between 6.50-6.75 percent.
In the Treasury bill auction held on Sunday, bid for BDT 8,000.00 was accepted compared to BDT 9,000.00 last week. Weighted average yield changed slightly for the 28-D and 364-D T-bills, but remained unchanged for all other categories.
International Markets USD Dollar
This week the US dollar hit a record low against the euro this week, breaking the psychological $1.47 barrier. The market retained its negative assessment of the US economy and strong US economic last week data failed to put a floor under the dollar's broad slide against the euro. Persistent fears about credit risks also continued to hurt the greenback. Citigroup's Sunday announcement that it may write off $11 billion of subprime mortgage losses has stirred worries that more write-downs could surface. The bank also saw its credit rating downgraded on Monday. General Motors Corp reported its biggest ever quarterly net loss of $39 billion, adding to fears the US's credit problems could be spreading to the wider economy and hurting growth. The Fed rate is now at 4.5 percent, and the rate is expected to cut interest rate further in the coming months.
Eurozone
The euro hit fresh lifetime high of $1.4730 against the US dollar and the Sterling was also on multi-year highs against the dollar, and crossed the psychologically important $2.10 mark. The ECB is widely expected to announce no change in its 4.0 percent interest rate later on Thursday. The Bank of England is also due to announce an interest rate decision on Thursday, with markets mostly expecting it to hold at a six-year high of 5.75 percent.
Yen
The yen has gained ground against the dollar this week and could gain against the dollar and other high-yielding currencies on further slides in US equities. This would prompt risk-averse investors to unwind carry trades in which they use the yen to buy higher-yielding currencies.
Commodities
Crude Oil prices reached a record peak of $98.62 a barrel on Wednesday, before falling a bit, while gold prices reached a record high of $836. Gold prices of $800 per ounce were last seen in 1980. The weakness of the US dollar has made these commodities attractive to investments.
- Standard Chartered Bank