Weekly Currency Roundup

December 23-December 27, 2007
Local FX Market
The US dollar/BDT market was soft throughout the week, as the markets opened after the Eid vacations. The USD/BDT rate was range bound, but there was ample demand in the market.
Money Market
Overnight money market was a little high at the beginning of the week, but eased as the week progressed and the market became more liquid.
In the Treasury bill auction held on Sunday, bid for BDT 8,000.00 was accepted compared to BDT 8,000.00 last week. Weighted average yield remained almost unchanged for categories T-bills auctioned on the day.
International Markets
There was little activity this week in the international market on account of the Christmas holidays. Analysts said that light post-holiday volume was exaggerating price movements, but some traders said that the dollar was starting to look vulnerable again and the currency's broad month-long rebound could be ending. The euro was trading around $1.43-1.45 and the sterling at $1.97-1.98. The sterling hit a record low against the euro. The yen hit a one and a half month low against the euro near the end of the week. The Japan's currency often used as proxy for the Chinese Yuan failed to benefit from a jump in the dollar/yuan exchange rate.
On the commodities market, oil was a bit higher at $96 a barrel and gold was also near a one month high. The equities markets were also doing well.
Once the new year starts, investors' focus may return to US fundamentals and thus to dollar selling. Data showed that October home prices in US posted its biggest annual drop, raising concerns of a broad slide for the US dollar in 2008.
-Standard Chartered Bank