Weekly Currency Roundup
US dollar remained steady against taka in the week, but ended the week slightly weaker. USD started the week at 59.00/59.05 against taka. At the end of the week, taka ranged between 58.95 and 59.00 against USD.
Money Market
Bangladesh Bank borrowed BDT 7,188 million by the treasury bill auction held on Sunday. Weighted average yield of 28-D bill remained unchanged at 8.00 per cent while the yield of 5-Y bill increased by 14 bps to 11.37 per cent.
The call money rate was volatile this week. The rate ranged between 6.50 and 6.75 per cent in the beginning of the week. But auction payment for T-bills created liquidity crisis in the market, which shot up the rate up to 14-15 per cent on 13th Jan. Improved liquidity condition eased the rate later ending the week at 8.50-9.00 per cent.
International FX Market
In the beginning of the week, the dollar pulled away from the previous session's three-year low against the euro, as the market looked ahead to key economic and corporate data. But the dealers viewed that with the dollar vulnerable to geopolitical and economic worries, Europe's single currency could soon test 1.06 level. Dollar sentiment is expected to remain bearish on the risk of war with Iraq, with the news of US doubling its troops in Gulf region, tensions with North Korea, and after the surprise 101,000 fall in December payrolls reported on Friday. Trade in Asia was thin due to holiday in Japan.
Dollar jumped in the Asian trade in the middle of the week, which sparked talk of Japanese intervention after Zembei Mizoguchi took over as Japan's forex chief and warned about yen's strength. But the greenback soon dropped back to overnight levels versus the yen. Dollar attempted to recover lost ground. The US currency pushed to $1.0505 per euro in European trade, almost a cent from Tuesday's 3-year low as the euro failed to break options barriers at $1.06 level.
The dollar moved in tight ranges against other major currencies at the end of the week with wary of Japanese intervention and was seeing little reason to spark fresh selling. Chance of dollar-buying intervention by Japanese authorities and sporadic bids by Japanese importers were the only dollar-supportive factors for the time being. The greenback's outlook remains bearish due to geopolitical concerns and uncertainty over the U.S. economy. Market was looking ahead to the January Philadelphia Federal Reserve survey on mid-Atlantic manufacturing, which was expected to show continued expansion. German preliminary GDP data for 2002 was also due and it was likely grew at its weakest pace in almost a decade
At 1520 hours on Thursday, euro was at 1.0576/80, GBP at 1.6046/50 and yen at 117.88/90 against the dollar.
-- STANDARD CHARTERED BANK
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