Weekly Currency Roundup

September 23-September 27
Local FX Market
The US dollar/BDT market was tight and USD remained strong against the BDT in the week. Demand for dollar was high in the local market and USD showed upward movement.
Money Market
Overnight money market was flat this week. The call money rate was range bound and most of the deals ranged between 6.50-6.60 percent throughout the week.
International Markets
In the beginning of the week, the dollar fell to a record low against the euro for a third straight session on Monday, weighed down by expectations of further US interest rate cuts, which are tarnishing the currency's appeal to global investors. Investors ignored more complaints from French officials about the euro's strength versus the greenback, which again dropped to a 15-year low against a basket of major currencies. Market players are keeping a close eye on whether the dollar breaks the all-time low of 78.19 struck on its trade-weighted index in 1992, a level that analysts said would provide a key test to whether the US currency's sell-off deepens or pauses.
The dollar steadied above the previous day's 15-year troughs against a basket of currencies in the middle of the week, as investors awaited US data to determine how deeply the global credit crunch has affected the economy. The dollar made particular gains against sterling after a report in a British newspaper sparked worries over troubles in the UK financial sector arising from the credit crisis. Investors will be looking to US existing home sales and consumer confidence reports later in the session and analysts say weakness in these numbers could push the Federal Reserve to follow last week's half-percentage-point interest rate cut with more policy easing. That should further erode the dollar's yield advantage over other currencies, particularly the euro, and could spark a fresh sell off in the US currency.
By the end of the week, the dollar fell to a record low against the euro for a sixth straight session, as investors braced for more economic reports that could affirm expectations the Federal Reserve will cut interest rate again in October. US economic data this week have provided no respite for the beleaguered dollar and have affirmed the view the Fed will cut its benchmark rate again after last week's half percentage point cut to 4.75 percent. Overall, the reports provided evidence of further US housing market decline, deteriorating consumer confidence and a sharper-than-expected fall in durable goods order.
-Standard Chartered Bank