The US currency thrust itself across the board with softer oil prices seen as the dominant force behind an oil-reliant US economy. The dollar also gathered momentum when a raft of upbeat data gave clues that the Federal Reserve would not be in a hurry to cut down rates.

In the beginning of the week, during New York trading sessions, the dollar showed modest gains as December data showing a stronger-than-expected rise in core producer prices, pushing the expectation of a near-term cut in interest rates to a remote corner. Another bunch of data released indicated that US industrial output expanded more than economists forecasted caused by strong increases in manufacturing and mining output. Furthermore, net capital inflows into the United States were enough to cover the US trade deficit for that month.

The interest rate futures market had fully priced in the expectation that the FED might keep the US interest rates unchanged at 5.25 percent at both the January and March meetings, but did not gave any clear clues as to whether the Fed might cut rates in the second half of the year.

Towards the end of the week, the dollar rally faded, as oil prices rebounded. The cool weather caused a recovery of the US crude futures from a 20-month low.

Against the Mauritian rupee, the dollar was trading at MUR 33.60 yesterday compared to MUR 33.731 a week earlier

<B>The yen plagued by low interest rates</B>

The Japanese kept on falling throughout the week plagued by, the fact that, the bank of Japan did not raise interest rates at its policy meeting this week. According to market rumors, the central bank was more interested in monitoring prices and consumption than hiking up the interest rates. Anyway, market analysts were not too keen on the yen as they could only conceive a maximum 50 basis points rise by the BoJ. Traders saw the opportunity of borrowing the low-yielding yen and used the funds to purchase higher-yielding currencies. This pushed the sterling to rise to an eight-year high against the yen. Against the Mauritian rupee, the yen was trading at MUR 28.52 as compared with MUR 28.93 a week earlier.

Sterling went for fantastic ride causing many investors to go dizzy as it vaulted to a 14-year high against the dollar to hit 1.99 on yesterday. With Japanese yen borrowing cost at only 0.25 percent, investors rushed into carry trades as the market had already priced in another 0.25 percent hike by the Bank of England next month. According to analysts, the pound was on a relentless march towards $ 2.

The pound supported by robust data</B>