The dollar was buoyed against most major currencies, rallying strongly amid growing expectations of higher US interest rates. Meanwhile, traders were poised, trimming positions, and locked in profits as they headed to a slew of potentially market-moving events.

The US February non-farm payroll rose to 243,000 in February, above economists? forecasts propelling the US currency to new highs.

The dollar fazed briefly against the euro when news that the United Arab Emirates? Central bank was considering converting up to 10 percent of its foreign exchange reserves from dollars into euros.

The UAE?s reserve was estimated to be approximately $23 billion in December and consisted entirely of US dollars.

Furthermore, in a separate news, US lawmakers were putting forth a case opposing a $6.85 billion deal under which Dubai Ports World, of the United Arab Emirates, would acquired the global assets of Britain-based P&O, including management operations in at least six major US ports.

In a communiqué, the state-owned Dubai Port stated that it would transfer the six US ports to a US entity, to mitigate concerns that the deal might posed a threat to the security of the United States.

<B>Worries over rising interest rate</B>

While the market was speculating on the number of US interest rate hike for 2006, a lot of actions were concentrated in the emerging market currencies which tumbled as worries over rising global interest rates sparked moves out of higher yielding riskier assets.

On the other hand, major currencies remained relatively immune to high volatility in emerging markets and commodities.

Against the Mauritian rupee, the dollar was trading at MUR 30.899, compared to 30.888 last week.

The Sterling had quite a dim week, despite a series of positive news. According to the Halifax home survey, UK house prices jumped by 1.4 percent in the month of February, giving an annual rate of increase of 5.5 percent.

The three months annual inflation rate rose from 5.1 percent in January. Those upbeat data anchored expectation that the Bank of England would hold interest rates at 4.5 percent for the seventh consecutive months.

As expected by the market, the Bank of England announced that it would keep the UK?s interest rates uncut. Immediately, the pound clawed back some gains against the dollar.

However, the ride did not last long when figures showed that British non-EU trade balance gap widened to a record level of 3.678 billion pounds.

Towards the end of the week, the Sterling capitulated, beaching key technical levels. The losses were limited by news of mergers & acquisitions which fired up the FTSE 100 share index with mobile phone giant, Vodafone and airport operator BAA jumping on takeover rumors.

Against the MUR, the Sterling was exchanging at 53.85 compared to 54.20 last week.Showtime for the Japanese currency in the last week?s trading session as the Bank of Japan dumped its ultra-loose monetary policy.

The market cautiously factored in at least one more rate hike before the end of this year.

Although the Bank of Japan had ended its fight against deflation, overnight and short-term interest rates remained near zero levels and that would continue for some time.

The Yen went thru a roller coaster ride last week, swinging from low to high and back to a steady at 118.35 yen against the US dollar.

The yen was sold at MUR 26.23 as compared to MUR 26.47 last week.

<B>Major data/events this week</B>

● <B>Wednesday 15 March</B>

US Mortgage Indx, Cap net flows,

● <B>Thursday 16 March</B>

US jobless claims

● <B>Friday 17 March</B>

US Michigan Prelim

EZ Ind Prod

● <B>Monday 20 March</B>

Tuesday 21 March</B>

US Redbook.

<B>Vassan Caleemootoo

Contribution by HSBC</B>