Weekly Currency Roundup

December 30, 2007-January 03, 2008

Local FX Market
The US dollar/BDT market was soft throughout the week, as the market was subdued after the New Year break. 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.
International Markets
The international market was a bit subdued this weekend amid thin trading volume because of the New Year's Day holiday. The euro gained some ground against the dollar amid concerns about the world's largest economy. The dollar fell half-a-percent versus the euro on the first trading day of the new year with investors inclined to bet that coming US economic news would be soft enough to confirm the need for more interest rate cuts. Although US existing home sales data was a bit better than expected, it did little to alter the downbeat view on the world's biggest economy cemented by the previous week's soft reports on new home sales and durable goods orders. The Sterling hit fresh record lows against the euro, as the ECB is expected to cut interest rates in the near term. The yen benefited from the dollar weakness and was on a bullish trend, as investors were unwinding their carry trade positions. The low interest bearing yen is used to fund investment in other high yielding currencies.
Commodities
Oil and gold prices saw record highs this week on the back of weak dollar performance. Oil prices finally broke the $100 mark, amid global supply concerns because of political instability in Nigeria and Kenya. Gold also rose as high as $867 as investors considered it as a safer bet when the dollar is weak.
-Standard Chartered Bank