Local FX Market

US dollar ended stronger against taka (BDT) in this week. USD started the week at 58.85/58.90 against taka. Increased import demand pushed the greenback and higher against taka. At the end of the week, taka ranged between 58.95 and 59.50 against USD.

Money Market:

Bangladesh Bank borrowed BDT 11,793.50 million by the Treasury bill auction held on Sunday. Weighted average yield of t-bills remained almost unchanged from the last week with only 1 bps increase in the weighted average yield of 28D and 2 year t-bill.

The call money rate was steady throughout this week. The rate ranged between 6.50 and 7.00 per cent in the beginning of the week. The rate slightly increased and went to 7.00-7.25 per cent at the end of the week.

International FX Market:

In the beginning of the week dollar slid to a six-week low against the yen and three-year low on the euro on Monday as jitters over a possible US led shrike against Iraq and North Korea's nuclear plans weighed it down. The greenback fell by half a yen to 119.29 in early European trade after a listless Asian session, raising concern that greater weakening may draw fire from Japanese authorities unwilling to see the yen rise further and hurt the export led economy. Euro climbed to a 3 year high of $1.0445 earlier in the session. Tokyo traders head off for a four-day holiday for the Japanese New Year on Monday, but the break would not necessarily stop Japanese authorities from intervening to curb yen's rise.

The dollar continued its slide and fell to a new three-year low against the euro and a four-year low versus the Swiss franc in Tuesday as investors sought protection from risks associated with a possible war with Iraq and mounting tensions with North-Korea. Euro hit its highest peak against the dollar since November 1999 near $1.05. Dollar also fell to 1.3810 Swiss franc, the lowest since January 1999 against the Swiss currency. The US economic data also failed to shift the market sentiment as the Conference Board reported that consumer confidence fell to 80.3 in December from 84.9 in November, well below the market's expectations of an 85.5 reading. Global tensions continued to be the focus rather than the economy, especially tensions over Iraq and North Korea.

In the end of the week dollar was helped off from its end-2002 lows by fears that Japan will intervene to check the yen's rise. But the traders expect that such a step will be short-lived as worries over war and disappointing data weigh on dollar. The yen came off Monday's 3-1/2 month high and slipped to 119.15 yen. Euro grew cautious ahead of the key $1.05 levels and fell to 1.0470/75 ahead of Euro Zone manufacturing data. The market began the year sitting very short on greenback. Releases of economic data, stock market trends and political news is likely to determine the trend of the Dollar in the future. Market in currently looking ahead for the US manufacturing activity data due on Thursday which is expected to be bullish.

At 1515 hours on Thursday, euro stood at 1.0478/80, GBP at 1.6050/57 and yen at 119.02/06 against the dollar. -- Standard Chartered Bank