January 26-January 31, 2002

Trading in the local foreign exchange market was moderate. Demand for dollar was steady.

In the weekly treasury bill auction held on Sunday, Bangladesh Bank accepted treasury bills worth of BDT 11.535 billion against a maturity of BDT 18.355 billion. The call money rate ranged between 6 and 7 per cent closing the weekly average at 6.5 per cent. The government accepted BDT 10,685 million at 4.01 per cent for 28-day T-bills, BDT 150 million at 5.25 per cent for 364-day T-bills, BDT 230 million at 6.76 per cent for 2-year T-bills and BDT 470 million at 9.5 per cent for 5-year T-bills.

Plunge of euro marked the beginning of last week in the international currency market. Amid growing apprehensions that euro land recovery will lag behind US recovery, euro tumbled to a six-month low against dollar and one-month low against yen. Swiss franc and sterling also mired to lower levels against the dollar in the euro rout.

In the middle of the week, yen gained ground against dollar and euro sparked by comments of Bank of Japan Governor. The governor said weaker yen would not be able to dissolve deep rooted economic problems of Japan. Dollar's fall was aggravated by a report that US Car Giant General Motors was lobbying against the weak yen coupled with the protest from National Association for Manufacturing protested against the strong dollar policy.

Later in the week, dollar was mostly firmer not comforted much by the 0.2 per cent annualised growth US economy posted in the last quarter of 2001 against an expected 1 per cent contraction. US Federal Reserve induced more trust in the economic recovery by leaving the Fed rate unchanged at its 40-year low of 1.75 per cent, putting an end to the most aggressive rate cutting spree in history, Meanwhile, euro continued its downward journey, with no positive news on the economic front to boost the euroland. Although yen lost a little ground against dollar at the fed rate left unchanged and the flow of positive US economic data, comments from Japanese officials has stopped the currency from soaring further.

At 1400 hours on Thursday, euro traded at 0.8604/06 against dollar, pound sterling at 1.4136/41 and yen traded at 32.91/97 against US dollar.

Standard Chartered Bank