Weekly Currency Roundup
September 30-October 04, 2007
Local FX Market
The US dollar/BDT market was active. USD remained weak against the BDT throughout the week. Demand for dollar was stable in the local market and USD showed downward movement.
Overnight money market was flat this week. The call money rate was range bound and most of the deals ranged between 6.50 and 6.60 percent throughout the week.
In the beginning of the week, the dollar edged up from earlier record lows against the euro and a basket of currencies, as investors braced for a fresh batch of US data for confirmation that more interest rate cuts are on the cards. Investors are now awaiting the Institute for Supply Management's manufacturing index due later in the session for further clues on the health of US economy. The ISM's employment component may shed some light on the likely outcome of the keenly-watched non-farm payrolls report on Friday.
The dollar eased but stayed above record lows against the euro and a basket of major currencies by the middle of the week as investors awaited key economic data later this week for more clues to the health of US economy. The euro trimmed losses made after European officials increasingly voiced their concern for the greenback's weakness, but it stayed away from its all-time highs against the dollar. The Australian dollar edged back towards 18-year highs versus the greenback as strong retail sales data reinforced the view that the Reserve Bank of Australia will keep its monetary tightening bias after leaving rates at 6.5 percent on Wednesday.
By the end of the week, the dollar slipped but stayed off record lows against the euro, with major currencies trading within narrow ranges ahead of key interest rate decisions from the Bank of England and the European Central Bank. Both the BoE and the ECB are expected later in the session to keep their interest rates steady at 5.75 percent and 4.0 percent, respectively, as the wait to see how the global credit crunch affects their overall economies. The euro was slightly up but well below its all-time high hit earlier this week. Sterling fell against the dollar and the yen, as the market speculated the BoE may lower interest rates at its meeting, while most investors were skeptical of such a possibility.
- Standard Chartered Bank