Weekly Currency Roundup

January 4, 2002-January 9, 2003

Local FX Market

US Dollar remained steady against Taka in the week, but ended the week slightly stronger due to higher demand for the US currency to meet import payments. USD started the week at 58.95/59.00 against Taka. At the end of the week, taka ranged between 58.95/59.05 against USD.

Money Market:

Bangladesh Bank borrowed BDT 16,878 million by the Treasury bill auction held on Sunday. Weighted average yield of t-bills remained almost unchanged from the last week. Weighted average yield of 28-D bill was 8.00 per cent and for 5-year bill the rate was 11.23 per cent.

The call money rate was steady throughout this week. The rate ranged between 6.50-6.75 per cent in the beginning of the week. The rate fell slightly and then again increased to end of the week at the same level.

International FX Market:

The dollar resumed its downward path at the beginning of the week and hovered above the multi-year lows. Market became increasingly worried about war with Iraq. Wariness about potential Japanese yen selling intervention increased after Finance Minister Masajuro Shiokawa warned that there was a global perception that the Japanese currency was too strong. Early in Asian trade, US Dollar briefly edged up to a high of 119.89, but lost the steam later and fell below 119 yen. In addition to the war, concern remains over the health of US economy.

In the middle of the week the dollar paused a cent above last week's three-year low against the Euro as dealers awaited U.S. jobs data and news regarding Iraq before deciding whether to extend the greenback's recent slide. The dollar rebounded earlier this week on hopes that massive tax cuts announced by President George W. Bush would strengthen the U.S. economy. But initial enthusiasm was faded away as doubts emerged over the effectiveness of the 670 billion package and its longer-term impact on the U.

S. current account and budget deficit. The threat of Japanese intervention to stem the yen's unwanted appreciation against the dollar was also helping to stabilize the greenback.

In the end of the week the dollar stayed defensive against the yen and the Euro in Asia on Thursday on lingering fears over war in Iraq and wariness over the outlook for the US economy as New York stocks headed lower. Euro reached a new 3-year high and crossed $1.05 level. Dollar was checked from further fall against the yen by concern over possible intervention from Japanese authorities. Japanese vice finance minister for international affairs, Haruhiko Kuroda, rattled the yen in early trade, saying the government was ready to act as needed on currency rates. The safe-haven Swiss franc and gold have scored hefty gains in recent sessions due to war threat and nuclear standoff with North Korea. Beside the war threat, growing pessimism over the outlook of the economy also contributed to the fall of dollar in recent session.

At 1515 hours on Thursday, euro was at 1.0532/34, GBP at 1.6108/12 and yen at 118.79/83 against the dollar.
-- Standard Chartered Bank