Last week trading on the currency market saw that the dollar muted over some very robust US economic data. Approximately 947 000 jobs were created for the past three months, which analysts considered to be the fastest three months improvements in employment in four years.

However, investors did not consider those figures to be spectacular enough to change expectations that the fed would raise rates by more than 25 basis points this month. In fact, a number of top economists had unanimously forcecasted that the Federal Reserve would raise the benchmark interest rate by at least 0.25% point of this month. Greenspan?s speeches this week will be closely watched for clues on the FOMC policy.

Against the Mauritian Rupee, the dollar was trading at MUR 28.40 on Tuesday compared to MUR 28.46 last week.

Over the last week, Sterling was broadly steady against the dollar by weakness against the Euro. Last week sessions were marked by a start but ended in a high trubulence mode for the Sterling.

The pound tracked the Euro all the way down, then up and finishing at its initial level against the greenback. Expectations that the Bank of England will hike up the rates are still quite high although a sizeable camp believes that the rate hike will come in a month or two later. As a result, analysts believe that the pound will be well supported until next Thursday when the rate decision will be announced. Hence preparint the market for a widening of the US-UK rate differential.

Rs 52,18 for a pound

Against the Mauritian Rupee, the pound was trading at MUR 52.18 on Tuesday compared to MUR 52.14 last week.

Concerns over the slowing down of the Chinese economy negatively impacted the Yen at the beginning of the week. As a result the Japanese currency lost approximately 1% of its value. However, towards the end of the week, the Yen staged a powerful rally against the dollar and Euro, boosted by signs of a renewed strength of the Japanese economy. Contrary to previous beliefs, the Chinese slowdown seems to bear more impact on Chinese exports as opposed to Japanese exports. Hence, foreign inflows have started to pour into the Japanese stock market. Revised Q1 GDP is expected to remain at 1.4% and economists believe that signs of deflation in the Japanese economy are diminishing.

Against the Mauritian Rupee, a 100 Yen was trading at MUR 25.87 on Tuesday compared to MUR 25.96 last week.

<B>Contribution by HSBC</B>