Rupee continues to recover against greenback in the open market

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Forex Research - Open Market Comments

Rupee continued to recover grounds versus dollar in the kerb as demand American dollar remained low. The American currency kicked off new day’s trading at Rs.79/50, posted more losses and was trading at Rs.79/40 at close of markets on Friday. Thus, rupee ended another day on a positive note versus dollar in the kerb dealings. In the international, the euro headed for the biggest weekly decline in a month against the dollar on speculation European Central Bank President Jean-Claude Trichet will signal in a speech today that he may cut interest rates to spur growth.

The 16-nation currency is set for its seventh weekly decline in eight weeks after ECB council member Erkki Liikanen flagged the possibility of using unorthodox monetary policy to deal with a deepening recession and the financial system’s meltdown. The yen headed for a fourth weekly drop versus the dollar, the longest losing stretch since December 2007, on speculation demand for the currency as a haven will wane.

“The outlook for a narrowing interest-rate differential is negative for the euro,” said Akio Yoshino, chief economist at Societe Generale Asset Management Ltd. in Tokyo. “The euro may fall to below $1.25 in the near future.”

Europe’s currency dropped to $1.2620 as of 11:31 a.m. in Tokyo from $1.2674 late in New York yesterday. It touched $1.2513 on Feb. 18, the lowest level since Nov. 21. The euro weakened to 118.76 yen from 119.37 yesterday, when it reached 120.34 yen, the highest level since Jan. 19. The U.S. currency traded at 94.11 yen, from 94.20 yesterday.

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