<B>LAST WEEK</B> trading on the currency market saw the European single currency ending the week against the dollar on a bearish tone, hitting a four-month low to trade below the 1.2000 level. The main cause for dollar firmness was the release on last Friday of surprisingly robust US jobs report.

The March US non-farm payrolls expansion of 308,000 jobs, in addition to upward revisions of January and February non-farm payrolls figures, took the first quarter monthly average above the 150,000 level that analysts say is necessary to absorb new workers into the labour market. With US job creation running at nearly four year highs in March, the possibility of a tightening of US interest rates by the Federal Reserve has now been brought into focus. A survey of economists revealed that they were evenly divided over whether the Fed will raise interest rates this year or wait until 2005.

The greenback also gained further ground against the euro on the back of upbeat ISM (Institute for Supply Management) non-manufacturing figure, which soared to 65.8 in March from 60.8 in February. It was the 12th straight month of expansion.

Earlier during the week, Euro had been trading at a session high of $1.2389 after the European Central Bank left interest rates unchanged at 2.0 percent on last Thursday. In the prior week various ECB officials including ECB President Trichet had been hinting at a possible interest rate cut if the need arose. Expectations of a rate cut had sent the Euro reeling to its year low against the dollar.

Against the Mauritian rupee, the common currency was trading at MUR 32.38 as compared with MUR 32.78 a week earlier.

Over the week, the Japanese yen powered against the dollar and the euro on growing optimism that the Japanese economy might be staging its strongest recovery since the bursting of the asset bubble more than a decade ago.

Given the improving economic fundamentals, large foreign buying of Japanese stocks, and the Japanese authorities apparent scaling back of currency intervention, the yen should soon challenge the 100 yen per dollar mark. However, yen shed some of its gains, as the dollar benefited from upbeat job and ISM figures and on expectation of a near-term rise in US interest rates.

Yesterday, the Japanese currency was offered at MUR 25.61 as compared to MUR 25.55 on the previous Tuesday.

Sterling broke through its recent highs and briefly traded around $1.8600 before correcting sharply lower on US employment data. Sterling further tumbled against a broadly stronger dollar as news of a sharp fall in Britain?s manufacturing output cast doubts over the future pace of UK interest rates. The Bank of England policy makers are expected to meet this coming Thursday to decide whether to raise interest rate or not.

Yesterday, the pound was trading at MUR 49.20 as against MUR 49.04 last Tuesday.

<B>Major data-events this week:

Thursday 08 April </B>

Bank of England interest

rate decision

US Jobless Claims

<B>Tuesday 13 April </B>

US Retail Sales

US Redbook

<B>Contribution by HSBC</B>