The dollar fell sharply against the yen Tuesday as investor demand for safe-haven assets and declining U.S. Treasury yields supported the Japanese currency.
The U.S. dollar weakened on Monday while currencies of India, China, Brazil, and Euro gained strength as analysts across the globe predicted that the emerging economies will recover sooner than the US economy from the worst recession in last sixty years.
The announcement Friday by the Labor Department that the U.S. lost 85,000 jobs in December is causing some concern that the U.S. economic recovery is faltering.
The ISM’s manufacturing purchasing managers’ index reported Monday was above the 54.0 forecasted by economists and the U.S. stocks climbed up on the first trading day of 2010. The dollar lost some esteem and the price of commodities rose.
The State Bank of Pakistan claims to have achieved the milestones set by the International Monetary Fund in the Stand-by Agreement signed in December 2008.
Some of the main factors for the rupee finding the floor in 2009 were the IMF program, slowdown in imports, S&P upgrade of the sovereign credit ratings, easing of inflationary pressures, return of portfolio investment to the equities market and record remittances.
After three years hiatus, the US dollar is poised for annual gain versus the yen as market is confident of the U.S. recovery. It is expected that the Federal Reserve may withdraw stimulus which will result in higher bond yields.
The dollar fell against the euro and a basket of currencies in thin, pre-holiday trade on Monday as firmer equity prices prompted investors to book profits on the greenback’s recent gains.
Gains in European and U.S. share markets .FTEU3 .SPX helped lift risk appetite and weighed on the safe-haven dollar, although analysts say the inverse relationship between stocks and the greenback has weakened recently.
The US dollar surged and has gone up against the euro since last week because of a short covering before the end of year. Asian stocks on the other hand have dropped.
As of yesterday State Bank of Pakistan will not sell foreign exchange to banks for financing the crude oil imports. SBP had given banks a full working week to get prepared for securing funding from the international market.