3
Tuesday, December 7, 2010
Euro drops sharply vs dollar as debt fears dominate
Top Economic Events Time 5:01 8:30 7th-8th 14:30 14:30 16:00 19:00 Tentative 20:00
Fed Chairman Bernanke comments fails to rattle dollar NEW YORK: The euro fell sharply against the dollar on Monday, marking its first decline in four sessions, as fears about euro-zone peripheral government debt moved to the forefront, trumping dovish comments made by US Federal Reserve Chairman Ben Bernanke. The weak performance of the euro comes ahead of a meeting of euro-zone finance ministers, who are under pressure to boost the size of a rescue fund to stop a debt crisis from spreading. The euro was down 1.14 per cent at $1.3261, according to Reuters data. Traders reported an options expiry on Monday at $1.3250. IMF chief Dominique Strauss-Kahn will present a report, a copy of which was obtained by Reuters, to euro-zone finance ministers meeting in Brussels, saying more action is needed from member states. This encouraged renewed selling of
the euro after a rebound late last week took it back above $1.34, with traders citing selling by real money accounts and sovereign names. Euro/dollar "has scope to move down further, with political developments and commitment from euro-zone policymakers likely to be the focus," said Paul Mackel, director of currency strategy at HSBC. The IMF report will say the eurozone should increase the size of its 750 billion euro rescue fund and the European Central Bank should boost bond buying markedly. With the euro resuming its decline, the dollar index was up 0.5 per cent at 79.814, close to its 100-day moving
average of 80.04. The dollar also bounced on a bout of short covering as investors shrugged off comments from US Federal Reserve
Chairman Ben Bernanke that quantitative easing could be bigger than estimated. Fed Chairman Bernanke appeared in an interview on CBS-TV's "60 minutes" late Sunday and communicated his view that it is possible that US monetary policymakers increase the additional $600 billion in asset purchases announced at the last Fed meeting.
Asian currencies
Taiwan dlr, won up on Fed view; Korea woes ease Seen staying strong on better fundamentals SEOUL: The Taiwan dollar and the South Korean won led gains in Asian currencies on Monday, boosted by the prospect that the US Federal Reserve's quantitative easing could extend beyond the programmed limit of $600 billion. Asia's strong economic fundamentals compared with other regions are expected to support Asian currencies, analysts and dealers said. "I don't see any major risks here, so Asian currencies will rise gradually. There are geopolitical risks in the Korea peninsula, but few investors expect a war there," said Kim Song-yi, an economist at HSBC in Hong Kong. The Taiwan dollar rose to
30.110, its highest level in more than three weeks, as stops were tripped at the open. The won rose as high as 1,131.1 per dollar, its highest mark since Nov 23 and a level it was trading at before North Korea's artillery shelled an island in the south. South Korea started nationwide live-fire naval exercises despite Pyongyang's warnings against conducting provocative drills in disputed waters off the west coast of the divided peninsula. The local currency is expected to find support from foreign appetite for the country's stocks, analysts and dealers said. "Despite tense news, we did not see more military clashes. So, it is more likely for the won
Stg edges up vs euro before debt talks LONDON: Sterling edged higher against a broadly softer euro on Monday as investors focused on euro-zone debt problems ahead of a meeting of European finance ministers. The euro-zone ministers meet on Monday and will face pressure to increase the size of a 750 billion euro ($1,006 billion) safety net for crisis-hit members in order to halt a
debt crisis in the single currency bloc. That will be followed by a meeting on Tuesday of ministers from the broader 27-country European Union, who are expected formally to approve an 85 billion euro aid package for Ireland and discuss the reform of EU budget rules. An IMF report obtained by Reuters said the euro-zone should have a bigger rescue fund for member states in trouble. Germany rejected such a move and dismissed
calls for joint euro-zone bonds. By 1605 GMT, the euro had fallen 0.4 per cent to 84.70 pence. Support was seen around 84.00 pence and then 83.34 pence, the low hit last week, traders said. Sterling fell 0.6 per cent to $1.5685, tracking losses in the euro versus the US currency. Traders said concerns about
the stability of the euro-zone would keep the single currency weak and this would benefit the pound. Trade-weighted sterling, which tracks the pound's performance against a currency basket, rose to 80.8 on Monday, pulling away from 80.6 hit late last week, its weakest since early November. Traders will look to the Bank of England's policy meeting later this week, although analysts expect no change in policy. -Reuters
to go to 1,120 per dollar, breaking through short-term resistance lines around 1,128," said Jeong My-young, a currency strategist at Samsung Futures Inc. The ringgit gained 0.2 per cent in thin trading, ahead of a Malaysian public holiday on Tuesday. After a strong year that has pushed the ringgit up almost 9 per cent, the upside may be limited, dealers said. "It also looks like the market does not want to test the central bank at 3.08 again because that looks like the line in the sand," a trader in Kuala Lumpur said. Still, traders said they expected the market to make another attempt to breach 3.08 before the end of the year. -Reuters
Swiss franc gains vs euro ZURICH: The Swiss franc held on to most of the previous session's gains against the dollar on Monday and rose slightly against the euro, following news the US Federal Reserve could inject further funds into the economy. "Bernanke has said more QE2 is possible. That will not support the dollar," Informa Global Markets analyst Tony Nyman said, adding there had also been a report of the International Monetary Fund telling the European Central Bank it should boost its bond buying. "This looks franc positive by default and we could see a sustained break below 1.30 in euro/Swiss in the early part of the week," Nyman said, adding that 1.2850 was his first major target. The franc was up 0.4 per cent against the euro compared to Friday's New York close, trading at 1.3019 per euro at 0707 GMT. The franc was little moved against the dollar at 0.9759 per dollar. The Swiss National Bank, which in June dropped its pledge to intervene in currency markets to combat the franc's rise against the euro, will hold its next policy review on Dec. 16. -Reuters
Australian, NZD hold onto gains before policy meetings WELLINGTON/SYDNEY: The Australian and New Zealand dollars edged back on Monday as a three-session rally drew some profit-taking, though both currencies held most of their recent gains helped by expectations of extended stimulus in the Unites States. The Australian dollar was hovering around $0.9880 on Monday, having surged around 1.7 per cent to as far as $0.9938 on Friday in a major turnaround from last week's $0.9535 trough. The currency was supported by a domestic data showing a healthy 2.9 per cent rise in job advertisements in November which augured well for an upbeat reading from the official employment report due on Thursday. Analysts are looking for a solid rise of around 19,000 in employment and drop in the jobless rate back down to 5.2 per cent. Such a result would help offset a run of softer data recently and keep the Reserve Bank of Australia (RBA) on inflation watch. The RBA holds its December policy meeting on Tuesday but there is virtually no chance of them lifting the 4.75 per cent cash
rate after Governor Glenn Stevens said the market was reasonable in pricing in the next move around mid-2011. Still, the RBA's tightening bias stands in stark contrast with the US Federal Reserve. In a tv interview, Chairman Ben Bernanke said it was certainly possible the central bank could buy more than $600 bln of bonds if the economy needed it and noted it could take four to five years for unemployment to fall to more normal levels. The Aussie currency now faces major resistance around $0.9955 which marked a peak back on November 22, with support from $0.9885 below which $0.9821, the 20-day moving average. The kiwi was at $0.7633 in late local trade, after steadily drifting lower from opening levels around $0.7670. Immediate support for the kiwi was seen at $0.7451, with resistance at $0.7566. The Reserve Bank of New Zealand holds it policy meeting on Thursday and is also expected to keep rates unchanged at 3 per cent. The Aussie was a touch firmer at NZ$1.2933, after earlier nudging a five-week high of NZ$1.2976. -Reuters
More asset purchases would be negative for the dollar, but his comments failed to hurt the greenback. Analysts and traders said Bernanke's comments on QE were not too bearish given Friday's below-forecast jobs data. The euro briefly rose to $1.3380 after European clearing house LCH.Clearnet reduced the margin requirement on Irish government bonds to 30 per cent from 45 per cent of net positions of its margin rate. Latest data from the Commodity and Futures Trading Commission showed currency speculators trimmed bets against the US dollar for a fourth straight week. The dollar was up 0.25 per cent to 82.83 yen, below its session high of 82.98, but climbing off Friday's threeweek low of 82.52 yen and keeping well above the Ichimoku 'cloud' bottom around 81.70 yen. -Reuters
Yuan up in narrow trade on stronger mid-point SHANGHAI: China's yuan ended up against the dollar on Monday after the People's Bank of China set a higher mid-point in the wake of US dollar weakness. Dealers said they expected the yuan to move in a small range in coming days but could appreciate 3 to 5 per cent next year after the Communist Party decided that China would shift to a prudent monetary policy from a moderately loose stance. "The market widely thinks this is relatively a kind of tightening policy for next year," said a dealer at a European bank in Shanghai. "So the yuan will keep gradually rising in 2011." Ba Shusong, with the Development Research Centre, a cabinet think tank, said in comments published on Monday that China was expected to let the yuan's effective exchange rate rise in 2011 under the new "prudent" monetary policy. "China will increase interest rates cautiously, and it will per-
mit appropriate appreciation of the yuan in terms of effective exchange rates," Ba said. Spot yuan closed at 6.6484 versus the dollar, up from Friday's close of 6.6633 and was up 2.67 per cent since the PBOC announced a depegging in mid-June. It moved in a range of 6.6469 to 6.6529, trading around the day's mid-point of 6.6515, which was stronger than Friday's 6.6605. The mid-point is a level from which the yuan may rise or fall 0.5 per cent against the dollar on a given day. The mid-point's firmer setting lagged a 1.2 per cent drop in the US dollar index last Friday, signalling that the central bank wants to let the yuan trade in a narrow range. Offshore, one-year NDFs was at 6.5000 bid late on Monday, from Friday's close of 6.4850, with implied yuan appreciation in a year's time falling to 2.33 per cent from 2.71 per cent shown on Friday. -Reuters
Indian rupee retreats from 3-week peak MUMBAI: The Indian rupee trimmed gains on Monday, retreating from three-week highs, tracking losses in the euro and a reversal in local shares but dollar sales by exporters helped the local unit notch its fifth straight daily gain. The partially convertible rupee closed at 44.95/96 per dollar, off a high of 44.7950, which was its highest since Nov. 12 but still 0.3 per cent above 45.10/11 at close on Friday. Last week, the rupee had risen 1.6 per cent in its best weekly gain in 2 months. "It was mostly a range play today. Rupee was closely tracking movements in the equity markets and the euro. There was good importer demand sub-44.90 levels," said Ashtosh Raina, head of foreign exchange at HDFC Bank in Mumbai. "Tomorrow again direction will depend on equities and cross currency movements overnight, but 44.80 is a strong support level for the dollar, so a 44.80-45.20 range is likely," Raina said. Foreign funds have bought $638 million worth of shares over last week, latest data shows, taking net invest-
ments to a record of around $29.3 billion in 2010, on top of the $17.5 billion purchased last year. The one-year premium rose to as much as 238.75 points from 229.50 points at Friday's close. One-month offshore non-deliverable forward contracts were quoted at 45.23, weaker than the onshore spot rate, suggesting a bearish nearterm outlook. In the currency futures market, the most traded nearmonth dollar-rupee contracts on the National Stock Exchange, MCX-SX and United Stock Exchange closed at 45.15, 45.1450 and 45.16 respectively, with total traded volume on the three exchanges at a moderate $6.2 billion. -Reuters
Source GBP AUD GBP GBP GBP EUR CAD GBP USD
Events BRC Retail Sales Monitor y/y Cash Rate Halifax HPI m/m Manufacturing Production m/m Industrial Production m/m German Factory Orders m/m Overnight Rate NIESR GDP Estimate IBD/TIPP Economic Optimism
Forecast
48.3
Previous 0.8% 4.75% 1.8% 0.1% 0.4% -4.0% 1.00% 0.5% 46.7
Actual
Forecast
Previous
0.4% 9.7 -6.5% 57.5
13.2 -2.9% 56.4
4.75% 0.3% 0.4% 0.3% 1.9% 1.00%
Previous Day Source
Events
AUD EUR CAD CAD
MI Inflation Gauge m/m Sentix Investor Confidence Building Permits m/m Ivey PMI
0.3% 14.0 14.9% 56.7
Currencies Rate Name EUR-USD USD-CHF GBP-USD USD-CAD AUD-USD EUR-JPY EUR-GBP EUR-CHF GBP-JPY CHF-JPY CAD-CHF Gold Silver
As per 22.00 PST Ask High 1.3299 1.3422 0.9859 0.9870 1.5685 1.5774 1.0064 1.0081 0.9897 0.9926 110.0800 111.0600 0.8479 0.8509 1.3116 1.3115 129.8100 130.6100 83.9200 85.1200 0.9805 0.9802 1416.0300 1418.7900 29.7400 29.8900
Bid 1.3295 0.9855 1.5681 1.0060 0.9893 110.0400 0.8476 1.3112 129.7500 83.8800 0.9800 1415.2300 29.6900
Low 1.3250 0.9726 1.5659 1.0025 0.9853 109.7000 0.8456 1.3004 129.6700 83.9100 0.9688 1409.7100 29.2800
London Inter Bank Offered Rates (LIBOR) Karachi: The following are the London Inter-Bank Offered Rates (LIBOR). British Members Association Interest Settlement Rates. AT 11:00 LONDON TIME 06/12/2010 A USD GBP CAD EUR JPY O/N 0.24031 0.55563 0.98167 0.36375 SN 0.08938 1WK 0.25500 0.56188 1.02667 0.65375 0.10063 2WK 0.25750 0.56625 1.06000 0.67500 0.10563 1MO 0.26500 0.57813 1.09750 0.76500 0.11875 2MO 0.28250 0.63313 1.15167 0.85625 0.14625 3MO 0.30344 0.74375 1.22917 0.97125 0.18250 4MO 0.35031 0.82625 1.30167 1.03500 0.24563 5MO 0.40813 0.93500 1.36500 1.11625 0.30375 6MO 0.45969 1.04063 1.44167 1.20625 0.35188 7MO 0.51313 1.11688 1.50667 1.25000 0.40375 8MO 0.56438 1.20188 1.57917 1.30000 0.45063 9MO 0.61688 1.28438 1.64500 1.34750 0.49625 10MO 0.66781 1.35938 1.71000 1.39750 0.52125 11MO 0.72094 1.42813 1.80000 1.44500 0.54750 12MO 0.78250 1.49625 1.88500 1.48625 0.57625
Major Central Banks Overview Central Bank
Next Meeting
Last Change
Dec 07 2010 Dec 09 2010 Dec 21 2010 Jan 13 2011 Dec 14 2010 Dec 16 2010 Dec 07 2010
Sep 08 2010 Mar 05 2009 Dec 19 2008 May 07 2009 Dec 16 2008 Mar 12 2009 Nov 02 2010
Bank of Canada Bank of England Bank of Japan European Central Bank Federal Reserve Swiss National Bank The Reserve Bank of Australia
Current Interest Rate 1% 0.50% 0.10% 1% 0.25% 0.25% 4.75%
Division of National Bank of Pakistan (NBP) KARACHI, December 06,2010 Treasury Management Division of National Bank of Pakistan (NBP) Monday issued the following Exchange rates: Countries Selling Buying Buying TT & OD TT Clean OD/T.CHQ U.S.A. U.K. EURO CANADA SWITZERLAND AUSTRALIA SWEDEN JAPAN NORWAY SINGAPORE DENMARK SAUDI ARABIA HONG KONG CHINA KUWAIT MALAYSIA NEW ZEALAND QATAR U.A.E. KR WON THAILAND
85.95 135.34 114.65 85.49 87.98 84.79 12.59 1.04 14.35 65.94 15.39 22.92 11.07 12.92 306.02 27.33 65.52 23.60 23.40 0.08 2.86
85.75 13502.00 114.39 85.29 87.77 84.60 12.56 1.03 14.32 65.78 15.35 22.86 11.04 12.89 305.31 27.27 65.37 23.55 23.35 0.08 2.86
85.56 134.71 114.12 85.07 87.54 84.37 12.53 1.03 14.28 65.61 15.31 22.80 11.01 12.86 304.51 27.20 65.20 23.49 23.29 0.08 2.85
Revaluation Rates Treasury Bills / PIBs / FIBs Holding Applicable for December 06, 2010
KASB
BMA
ELXIR
GSL
ICSL
0-7days
12.40
12.40
12.35
12.30
12.50
12.35
12.38
8-15dys
12.60
12.60
12.50
12.50
12.65
JSCM AvgRate 12.50
12.56
16-30dys
12.80
12.72
12.70
12.75
12.75
12.75
12.75
31-60dys
12.90
12.80
12.88
12.85
12.85
12.85
12.86
61-90dys
13.02
13.04
13.04
13.04
13.05
13.05
13.04
91-120dys
13.25
13.15
13.15
13.18
13.15
13.10
13.16
121-180dys
13.28
13.29
13.31
13.32
13.25
13.25
13.28
181-270dys
13.45
13.40
13.45
13.50
13.45
13.30
13.43
271-365dys
13.60
13.62
13.60
13.65
13.55
13.55
13.60
2-- years
13.70
13.55
13.68
13.70
13.60
13.65
13.65
3-- years
13.75
13.75
13.75
13.75
13.70
13.75
13.74
4-- years
13.85
13.80
13.77
13.78
13.75
13.79
13.79
5-- years
13.87
13.90
13.78
13.80
13.75
13.81
13.82
6-- years
13.88
13.85
13.79
13.88
13.80
13.83
13.84
7-- years
13.90
13.90
13.84
13.95
13.80
13.84
13.87
8-- years
13.95
13.96
13.89
14.00
13.80
13.86
13.91
9-- years
13.95
13.98
13.95
14.10
13.85
13.88
13.95
10--years
14.10
14.08
14.12
14.20
14.10
14.08
14.11
15--years
14.50
14.35
14.40
14.40
14.35
14.30
14.38
20--years
14.60
14.50
14.50
14.65
14.50
14.40
14.53
30--years
14.75
14.75
14.70
14.90
14.70
14.60
14.73
Currencies Correlation USD/JPY Period 1 1 3 6 1 2
AUD/USD EUR/CHF EUR/GBP EUR/JPY
week month months months year years
-0.93 -0.94 -0.75 -0.89 -0.62 -0.63
0.58 -0.39 -0.71 0.30 0.71 0.72
-0.46 -0.81 -0.78 -0.71 0.31 0.29
-0.05 -0.53 -0.36 -0.25 0.62 0.68
EUR/USD GBP/USD -0.76 -0.87 -0.81 -0.90 -0.07 0.00
-0.95 -0.82 -0.63 -0.89 -0.40 -0.20
NZD/USD USD/CAD -0.88 -0.85 -0.63 -0.81 -0.66 -0.62
0.77 0.83 0.56 0.52 0.17 0.57
Karachi Inter Bank Offered Rates (KIBOR) Karachi: The following are the Karachi Inter-Bank Offered Rates (KIBOR)06/12/2010 1WEEK
2 WEEK
1 MONTH
3 MONTH
6 MONTH
9 MONTH
1YEAR
2YEARS
BID
ASK
BID
ASK
BID
ASK
BID
ASK
BID
ASK
BID
ASK
BID
ASK
BID
ASK
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
ABLN 12.10
12.60
12.35
12.85
13.00
13.50
13.15
13.40
13.40
13.65
13.45
13.95
13.60
14.10
13.70
14.20
JSBL
12.40
12.90
12.60
13.10
12.80
13.30
13.45
13.70
13.50
13.75
13.45
13.95
13.70
14.20
14.00
14.50
ASPK 12.30
12.80
12.50
13.00
12.65
13.15
13.00
13.25
13.30
13.55
13.40
13.90
13.50
14.00
13.70
14.20
CIPK
12.20
12.70
12.30
12.80
12.60
13.10
13.10
13.35
13.50
13.75
13.60
14.10
13.70
14.20
13.75
14.25
DBPK 12.10
12.60
12.20
12.70
12.45
12.95
12.85
13.10
13.20
13.45
13.35
13.85
13.40
13.90
13.60
14.10
FBPK 12.25
12.75
12.40
12.90
12.70
13.20
13.15
13.40
13.40
13.65
13.55
14.05
13.65
14.15
13.85
14.35
FLAH 12.30
12.80
12.50
13.00
12.65
13.15
13.15
13.40
13.35
13.60
13.45
13.95
13.60
14.10
13.70
14.20
HBPK 12.25
12.75
12.35
12.85
12.70
13.20
13.10
13.35
13.35
13.60
13.45
13.95
13.60
14.10
13.70
14.20
HKBP 12.25
12.75
12.35
12.85
12.70
13.20
13.10
13.35
13.30
13.55
13.40
13.90
13.60
14.10
13.65
14.15
NIPK
12.30
12.80
12.55
13.05
12.80
13.30
13.15
13.40
13.35
13.60
13.40
13.90
13.45
13.95
13.50
14.00
HMBP 12.25
12.75
12.40
12.90
12.80
13.30
13.10
13.35
13.35
13.60
13.50
14.00
13.60
14.10
13.70
14.20
SAMB 12.25
12.75
12.40
12.90
12.70
13.20
13.10
13.35
13.35
13.60
13.40
13.95
13.65
14.15
13.75
14.25
MCBK 12.10
12.60
12.30
12.80
12.60
13.10
13.00
13.25
13.30
13.55
13.40
13.90
13.50
14.00
13.75
14.25
NBPK 12.25
12.75
12.35
12.85
12.70
13.20
13.05
13.30
13.20
13.45
13.40
13.90
13.60
14.10
13.70
14.20
SCPK 12.15
12.65
12.35
12.85
12.60
13.10
13.00
13.25
13.25
13.50
13.45
13.95
13.50
14.00
13.70
14.20
UBPL 12.20
12.70
12.35
12.85
12.60
13.10
13.10
13.35
13.35
13.60
13.45
13.95
13.60
14.10
13.70
14.20
AVE
12.74
12.38
12.88
12.68
13.18
13.10
13.35
13.34
13.59
13.44
13.94
13.59
14.09
13.71
14.21
ABPL
12.24