Weekly Currency Roundup
February 17-February 20, 2008
Local FX Market
Local inter-bank FX market liquidity improved slightly during the week; however the BDT remained almost unchanged against the USD.
Money Market
Overnight money market remained slightly tight during the week. Range moved from 8.00-9.00, 8.50-9.50. The market was mostly steady near the end of the week.
In the Treasury bill auction held on Sunday, bid for BDT 9,000.00 was accepted compared to BDT 9,000.00 last week. Weighted average yield remained rose slightly for the 91D category T-Bills but was almost unchanged for all other categories auctioned on the day.
International Markets
US dollar
The week begun with the US dollar lying low against most major currencies, as US economic reports of consumer confidence and manufacturing data rekindled fears that the economy continued to slouch towards recession. The dollar steadied later in the week as investors waited for the release of further US data, which would give clues on the health of the economy. The greenback received some positive views as traders expected that gains in Asian markets and positive impact of relaxed monetary and fiscal stimulus in the US might regenerate growth in the US.
Euro
The euro extended gains against the dollar as expectations for the ECB to cut interests faded after last week and fears of further cuts from the Fed loomed over the market.
GBP
Sterling fell 0.4 percent against the dollar following Sunday's announcement that Britain had decided to nationalise ailing bank Northern Rock, adding to worries on the health of the UK economy. The currency fell further on Wednesday after the release of the minutes of BOE meeting, which widened possibilities of further rate cuts.
Others
The Aussie climbed half a percent to a three-month high above $0.91 thanks to its hefty yield advantage and expectations that the Reserve Bank of Australia will raise rates from current high rate of 7%. The yen rose on Wednesday with rising concern that credit-market losses will widen prompted traders to reduce holdings of higher-yielding assets funded in Japan.
- Standard Chartered Bank
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