Rupee shows stability while gold prices fall

KARACHI: After showing strength during the week, the rupee lost ground against major currencies on Saturday. However, the drop was not enough to wipe out gains made against the greenback during the week.

The Pakistani currency fell 10 paisas in the open market on the last trading day of the week, against the US dollar.

However. The rupee was trading at 85.85/86.15 on last Monday but strengthened slightly to close at an exchange rate of 85.80/86.06 rupees on Saturday.

Rupee lost ground against the Euro, in the open market during the outgoing week. The 16-nation currency has seemed jittery against other currencies in recent days on the back of stress tests of European banks. However the rupee has tumbled Rs1.7 since last Monday to close at 110.1/111.4 rupees per euro on Saturday.

“Around this time of the year, more people are going for Umrah and other holidays so that has increased demand for foreign currencies in the open market,” said President Forex Dealers Association Malik Bostan.

He added that “home remittances are likely to improve in coming weeks and demand for US dollars normally falls during Ramazan”.

Bostan said that these developments should help the rupee gain strength against the dollar and other currencies in upcoming days.

Gold prices down

Gold prices continued to slide during the outgoing week. Per tola prices of the precious metal fell by Rs100 on Saturday to end at Rs38,550.

Similarly, rates for ten grams of gold also fell by Rs86 to close at Rs33,042. Chairman, All Pakistan Gold Jewellers Association, Haroon Chand told The Express Tribune that the investors trust in foreign currencies seemed to be returning. “That is why there is a shift from gold to more liquid assets,” he said.

Local prices registered sharp falls. Last Saturday, July 17 rates had reached Rs39,000 per tola, while ten grams of gold were fetching Rs33,428.

Local prices have dropped by Rs450 per tola since then to Rs38,550 at the end of current week. Chand forecasted that gold prices will continue to remain under pressure in the upcoming week.

Demand for gold has slowed in international markets as well. Gold was trading at $1189 per ounce in the international markets on Saturday after falling $9 from the previous day. Global prices of the precious metal had touched $1,212 per ounce last Saturday, but have slid down by $23 in the past week.

Published in The Express Tribune, July 25^th, 2010.