Local FX Market
Demand for US Dollar was high in this week and USD remained bullish against taka.
In the Treasury bill auction held on Sunday, bid for BDT 6,398.00 million was accepted, compared with total of BDT 10,686.00 million in the previous week's bid. Weighted average yields increased slightly this week.
Overnight call money market was range bound this week. The rate ranged between 6.00-6.50 percent during the beginning of the week, while ended at 6.50-7.00 percent.
International FX Market
The yen sank to a 32-month low against the dollar and an all-time low versus the Euro on Monday after Japanese officials signaled on the sidelines of a G7 meeting that they were unfazed by the currency's slide. The yen was not a topic at the weekend meeting of finance ministers and central bankers from the world's leading economies, giving market players more reason to think that Group of Seven officials had no qualms about the currency's weakness. Big buying of foreign bonds by Japanese investors, combined with foreigners hedging their purchases of Tokyo shares to protect against a further yen drop, have helped drive the dollar up about 18 percent versus the yen this year. The Euro lost ground against the U.S. currency taking it closer to a two-year low. Against other currencies, the yen also tumbled to new depths: a 13-year low against the Canadian dollar, eight-year lows versus the New Zealand and Australian dollars, and a seven-year low against the British pound.
The dollar rallied broadly during the middle of the week, gaining ground against high yielding currencies, particularly the New Zealand dollar, even as investors pondered the longevity of U.S. credit tightening. The kiwi plunged overnight influenced by investment bank Goldman Sach's recommendation to sell the currency ahead of a forecast New Zealand slowdown next year and ratings agency Standard and Poor's highlighting of the country's large current account deficit. Australia left rates unchanged at 5.5 percent on Wednesday as expected, while the Reserve Bank of New Zealand was seen raising on Thursday to 7.25 percent -- taking the highest short-term rates in the developed world even higher. The dollar edged back towards a 32-month high against the yen, which was also mired near a record low against the Euro and in sight of 8-1/2 year lows versus the Australian and New Zealand dollars.
The dollar slipped to a one-week low against the yen and lost ground against the euro on Thursday, as investors locked in profits on the greenback's rally in 2005. The yen was supported after Governor Toshihiko Fukui said chances of a monetary policy shift by the Bank of Japan will increase next year though he added that the central bank will keep rates near zero after that. By 0910 GMT, the euro was up 0.5 percent moving further away from a two-year low touched last month. The dollar fell half a percent against the yen, a one-week low.
This memorandum is issued by Standard Chartered Bank and is based on or derived from information generally available to the public from sources believed to be reliable. While all reasonable care has been taken in its preparation no responsibility or liability is accepted for errors of fact or any opinion expressed herein.