Weekly Currency Roundup
March 20-24, 2011
This week attention turned to the euro zone with the sovereign debt issues again coming to the forefront. The euro rebounded from an early fall on Thursday on Middle East and sovereign buying, with worries over Portugal's political crisis and the health of the Spanish banking system increasingly factored in to the currency. Still, traders say rallies are likely to be shallow and the euro will struggle to rise past option barriers around $1.4250, the level it hit on Tuesday for the first time since early November. The euro was up about 0.3 percent on the day at $1.4125 after slipping to a low of $1.4049 in early European dealing following Moody's announcement that it had downgraded 30 Spanish banks by one or more notches, though notably not the biggest players, Santander and BBVA. Adding to the euro's woes, Portugal's prime minister quit on Wednesday after parliament rejected his government's latest austerity measures, increasing the chances that the country will need a bailout. Market participants said the currency was growing resilient in the face of a string of bad news, though this may not be a positive development. The dollar index, which measures the dollar's value against a basket of currencies, was steady at 75.826, clinging to the gains it made on Wednesday. Against the yen, the dollar held steady from late US trade at 81.00 yen. Market players are wary that Japan may intervene further to sell the yen if the dollar drops below 80 yen, and especially if such a move occurs in volatile trade as was the case last week, when the yen hit a post-war record high of 76.25 to the dollar in the wake of a devastating earthquake and tsunami and a nuclear crisis.
Local Money Market:
Call money rates stayed steady, and mostly traded in the 9-12% band.
Local Market FX:
USD/BDT rates were sharply up in the interbank market.