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The rupee already under tremendous
pressure against euro and pound sterling these days fell
to record lows against both currencies in the trading
overnight. As it was expected, euro touched Rs. 80/-
mark for the first time in the history of trading here
in the kerb since its launch while sterling further
improved its record price level which it had set two
days ago. Both currencies principally gained on account
of their upbeat performance against green back in the
international market at week end. Both currencies ended
at record levels on Friday thus severly denting rupee’s
standing on the desks here in the local dealings as
well.
Euro:
Euro which was all set to hit the Rs. 80/- barrier (as
statted in my earlier reports as well) atlast hit a new
price level for the rupee to chase. The currency which
ended at Rs. 79/40 accelerated with a top gear breaking
new barriers and took a break at Rs. 80/-. At one stage
the currency had touched Rs. 80/10 but then came on the
back foot again. This 0.60 paisa fall is attributed to
the fact that fresh damage ensued in the dollar in the
weekend trading after the release of the US jobs report
which revealed disappointing statistics as US jobs grew
by a disappointing 112K in November, following a revised
303K increase in October. The tepid job growth was the
lowest since July, thus throwing cold on last month’s
strong labor report. The unemployment rate fell back to
5.4% from 5.5%, while average hourly earnings rose 0.1%
from a revised 0.3%. An aggregate of 54,000 jobs was
revised down in September and October. The blow to the
dollar was especially severe as it damaged the
currency’s fragile attempt to recover yesterday. The
labor report propelled the euro by 2 cents to a fresh
all time high of $1.3460 and thus set all time highs in
the foreign exchange markets globally.
Short term trend:
With the euro nearing the key $1.35 level, deemed as the
1.4478 low in USD/DEM attained in summer 1995, there is
rising speculation of a possible intervention by the
European Central Bank at this stage. This could take the
form of more aggressive jawboning next week. Tuesday’s
ZEW survey from Germany is expected to show further
deterioration in economic sentiment, but that would only
engender a euro decline in the event that the currency
has tapered off following rising signs of concerns.
Failure from the ECB to intervene verbally or
operationally by Monday trade could extend the pair to
$1.3495-00 before derivatives stops pressure it back
towards the $1.3430s. Thus on the upside, rupee would be
looking to face more pressure and under this level may
fall upto Rs. 80/30 while at the downside, the currency
seems to retreat to Rs. 79/90. Thus we expect rupee to
trade between a price range of Rs. 80/30-Rs. 79/90 by
coming Monday.
Pound Sterling:
Sterling on the other end further improved its record
which it had set just tow days ago on 2nd Dec. The price
rise was not a surpise for the national currency because
it was expected and as said, sterling had already
crossed the Rs. 115/- barrier on Thursday. However, the
highest price then recorded was Rs. 115/10 while today;
we saw sterling crossing the same and taking breath at
Rs. 115/50. This implies that this week, sterling has
ended as the major gainer as an increase of Rs. 2/30 has
been recorded in its price against rupee. The currency
had started at Rs. 113/30 and was changing hands at Rs.
115/50 till Saturday mid afternoon. The weak US jobs
report which injected new life into euro at the same
time helped sterling as well and therefore the currency
gained 2 cents trading to $1.9428, 10 pips short of
Thursday’s 12-year high. Sterling closed at Rs. 114/85
while overnight it had jumped up to Rs. 115/60 mark.
Just to recall, the rupee fell to new lows against pound
sterling earlier this week which jumped up to new highs
in the history of kerb trading. Pound sterling had
touched Rs. 115/- mark for the first time in the history
of currency trading here in the kerb as sterling’s
highest price ever recorded was Rs. 114/85 which was on
1st Dec. 2004. The major reason of this robust
acceleration was its performance against the green back
in the international market where an unexpectedly strong
manufacturing PMI survey from the UK combined with
Mervyn King’s bullish comments on Wednesday paved the
way for another 2.5% rally in cable towards a fresh
12-year high of $1.9334. Britain’s manufacturing PMI
jumped to its highest level since July at 55.0, beating
both last month’s figure at 53.5 and consensus forecasts
of a dip to 52.5. This was the survey’s 17th straight
time above the key 50 level, denoting a contraction and
an expansion. All these factors led sterling to close
current week on a strong note here in the kerb like all
major world markets.
Short term trend:
Sterling which pared all but 10 pips of Thursday’s 2.3
cent drop, failed to hit a fresh 12 year high as EURGBP
regained the 69.20 pence level. Should the euro momentum
overcome sterling’s rally more recently as a result of
BoE Governor Kong; cable’s fortunes may become more
limited and therefore we may see more recovery in the
price of rupee next week as well. Sterling is now eyeing
support at $1.93, followed by $1.9230 and $1.91whereas
key foundation stands at the previous high of
$1.9035-40. Resistance stands at $1.94, followed by
1.9430 and 1.9460 which indicates a price range of Rs.
115/40-Rs. 114/80 till Monday.
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