Weekly Currency Roundup

Local FX Market

US dollar remained steady against taka in the week, but ended the week slightly weaker due to sluggish import demand and increased remittance from expatriates. USD started the week at 58.95/59.00 against taka. At the end of the week, taka ranged between 58.87/58.97 against USD.

Money Market:

Bangladesh Bank borrowed BDT 6,225 million by the Treasury bill auction held on Sunday. Weighted average yield of 28-D bill fell from 8.00 to 7.75 per cent, while the yield of 5-Y bill increased by 13 bps to 11.50 per cent.

The call money rate was slightly downward this week. The rate ranged between 8.75-9.25 per cent in the beginning of the week. Improved liquidity condition eased the rate later ended the week and the call rate ranged between 7.75 and 8.25 per cent.

International FX Market:

The dollar bounced back modestly against major currencies on Monday, but its prospect remained cloudy after a spate of weak US economic data and corporate reports. The possibility that Japan may intervene by buying US dollars in thin trading due to a US holiday kept traders cautious about testing below the 118 level after the greenback hit a four-month low of 117.40 yen in post-Asian trade on Friday. Renewed weakness on Wall Street in a key corporate earnings season was also darkening sentiment for the dollar. A poor outlook from Microsoft and IBM pushed the NASDAQ down to its biggest percentage loss in a month.

The dollar fell to a new three-year low against the euro for a fifth successive day in the middle of the week and approached four-year lows against the Swiss franc, supported by increasing talk of a US-led war against Iraq. The dollar's latest slide set in on Tuesday, after US President George W. Bush warned that war against Iraq is imminent. The euro rose as high as $1.0744 on Wednesday, its best showing since October 1999, before retreating. Only wariness of yen-selling intervention by the Japanese authorities kept the dollar in a tight-range against the yen and above 118 level.

The euro held near recent 3-year peaks against the US dollar and rose to its new three-year high against the yen at the end of the week, as mounting anxiety over a possible war in Iraq mounted. The euro also extended its recent gains against the yen, rising to a three and a half years high at 127.22 in Asia, before slipping back to stand almost unchanged for the day. With little economic data in the way, attention focused increasingly on the prospect of war. US weekly jobless claims and lead indicators for December are due later in the session. But are not seen as tremendous market movers.

At 1620 hours on Thursday, euro was at 1.0754/61, GBP at 1.6226/32 and yen at 118.19/24 against the dollar. -- Standard Chartered Bank