THE DOLLAR remained under selling pressure, while the upward trend in rupee persisted during the last week. There was lack of interest in fresh dollar-buying.

Trading activity in the inter-bank market as well as kerb dealings remained dull in the absence of speculative trade. No major development took place during the week. The dollar supply remained sufficient in the absence of the demand.

In the inter-bank market, the rupee opened the week on a positive note and traded at Rs61.25 and Rs61.30 versus the dollar on November 5, showing an appreciation of 15 paisa against the previous week-end close of Rs61.40 and Rs61.45 on November 3. The demand for dollar remained subdued, amid comfortable dollar supply in the following three days. As a result, the rupee gained another 13 paisa over the dollar on November 7, when the dollar was quoted at Rs61.12 and Rs61.17. It remained unchanged on November 8. The trading remained suspended on November 9, being a public holiday on account of Iqbal Day. The inter-bank market resumed trading on November 10, with the dollar under persistent downward pressure. During the week the rupee gained 28 paisa.

Against other major currencies, the rupee continued to strengthen over all the major European, Asian and the Middle Eastern currencies at the inter-bank forex counter. During the week it further gained strength over the British pound, German mark euro, Canadian, Hong Kong and Singapore dollar, Swiss, French and Belgian francs, Dutch guilder, Danish and Norwegian krones, Spanish peseta, Italian lira, Austrian schilling, Chinese yuan, Malaysian ringitt, Kuwaiti diner, Saudi and Qatari riyals and the UAE dirham. The rupee, however, lost ground versus the Japanese yen, Australian and New Zealand dollars and managed to hold Swedish krona at the previous week’s level.

In the kerb trading, the rupee gained 20 paisa against the dollar on the opening day of the week and traded at Rs61.25 and Rs61.45 on November 5. It gained another 10 paisa for selling on November 6, amid sufficient dollar supply. The dollar continued to weaken in the absence of speculative trading and low demand for the dollar. The rupee, as a consequence, gained further by 25 paisa on November 6, when it traded at Rs61.00 and Rs61.30 against the dollar. Finally it touched Rs60.60 and Rs60.80 on November X, with the rupee gaining another 60 paisa.

The dollar rate in the kerb once again fell below, the inter-bank rate during the week inter-bank rate ruled higher than the kerb since November 7. The market was closed on November 9 being Allama Iqbal Day. The rupee gained 75 paisa over the dollar in the week. The present trend is likely to continue as no major change is expected in the absence of demand in the near future.

In the international financial market, the dollar held early gains on November 5, in New York as the investors dismissed a sharp drop in October in the US service sector activity, while focusing on growing worries. The European Central Bank will fail to deliver a hoped-for interest rate cut this week. The euro stayed under pressure even after the US National Association of Purchasing Management’s October reading of the non-manufacturing sector fell to 40.6 from 50.2 in September, hitting its lowest level in the survey’s four-year history and well below economists’ forecasts of 45.9.

The euro was off 0.63 per cent at 89.64 cents, and fell 0.46 percent to 109.23 yen. The dollar was up 0.16 per cent at 121.86 yen, but off a session high of 122.11 yen. The dollar edged down from a one-week high against the Swiss franc, trading at 1.6429 francs, up 0.74 per cent.

In Tokyo, the euro hit one-week lows against the dollar and the yen on withering hopes of a euro-zone rate cut and a report suggesting the European governments could be masking the true extent of their budget deficits. The euro dropped to 88.65 cents, its lowest level since last October 29, from 90.23/27 cents in late New York on October 26. The single currency dipped to around 109.20 yen, down from 109.82 in late New York. The dollar was firmer as a staggering fall in the US non-farm payrolls fanned expectations of another US interest rate cut. The greenback was at 121.83/89 yen compared with 121.64/72 yen in late New York.

In London, the sterling rose a third of a per cent against the euro and trimmed losses against the dollar after the British prime minister ruled out any artificial devaluation of the pound versus the euro. The pound stood around $1.4565, down slightly from previous week’s New York close but about half a cent above the day’s lows. The sterling rose to the day’s highs around 61.45 pence per euro, taking it within sight of eight-week highs around 61.30 pence.

In New York, on November 6, the dollar edged higher against the euro after the US Federal Reserve cut interest rates for the 10th time this year but gains were slight as dealers waited to see if the European Central Bank would step forward with a rate cut at its meeting. While the latest Fed rate cut failed to give the dollar a substantial boost — investors are eager to see when the Fed’s 4.5 percentage points in cuts this year will bear fruit and spark recovery.

The dollar rose 0.3 per cent against the euro to 89.51 cents per euro. After the September 11 attacks pushed the dollar to its lowest levels since March, the greenback has since risen 3.8 per cent and is now up nearly 5 per cent on the year. The technical buying of yen helped push the Japanese currency up about a half per cent against both the dollar and the euro, with the dollar slipping about to 121.04 yen from 121.63. The euro fell to a five-week low near 108.40 yen.

In Tokyo, the dollar remained in a narrow band against the yen and the euro with dealers bracing for an expected round of interest-rate cuts this week. But most dealers saw downside risks for the dollar against the Japanese currency. The dollar stood at 121.58/68 yen, little changed from a late New York level of 121.70 yen, having moved in a tight 22-pip range. The euro was at $0.8981/86, bouncing slightly from a session low of $0.8963. Against the yen, the single currency also skipped to 109.17/28 from below 109 yen. In London, the sterling was trading at $1.4585 virtually unchanged on the day. Against the euro, the pound was a touch stronger at 61.45 pence.

On November 7, the dollar sagged to a two-and-a-half week low against the yen in Tokyo and slipped against the euro, failing to draw support from the US Federal Reserve’s decision to cut rates from the 10th time this year. The dollar drifted to a low of around 120.70 yen, its lowest level since October 18, with some analysts saying further such cuts in short-term rates would do little to help the US economy

In London, sterling gained half a per cent on the broadly weaker dollar coming within sight of last week’s peak as the previous day’s US interest rate cut played into its hands. The pound travelled up in early buying to just below last week’s three-week peak at $1.4687 but pared gains to stand half a per cent up at $1.4635. Against the euro it slid a quarter of a per cent to 61.50 pence, although dealers said the action there, had been limited.

On November 8, the euro was on its guard in Tokyo, hours before the European Central bank was to deliver its decision on the monetary policy, while the dollar erased early gains on the yen triggered by fresh worries over Japan’s banking system. The single currency traded at 89.67/72 cents, down slightly from the late New York level of 89.83, and down from a high of 90.48 high on the previous day. Against the yen, it slipped a little to 108.39/49 yen, from the day’s high around 108.80 yen. The yen suffered from renewed worries about the Japanese banks’ financial health after the shares in Asahi Bank and Dawia Bank - due to merge to form Japan’s fifth-largest banking group — plunged to new lows for the year. The greenback fell back to 120.85/90 yen, level with its late New York level of 120.89.

In London, the sterling fell a per cent against the dollar tracking the broadly softer euro in the wake of surprise half percentage point rate cuts by both the euro zone and the British central banks. The euro fell across the boarded after the European Central Bank’s move. Sterling briefly firmed against the dollar after the BoE cut rates by 50 basis points but buying was short-lived as the euro came under broad-based pressure. The sterling fell nearly a cent to $1.4543 from the New York close of $1.4640. Against the euro, it was nearly unchanged at 61.27 pence.

In New York, the euro tumbled against the dollar and hit six-week lows against the yen. It shed more than half a per cent against the dollar to 89.25 cents. But the euro recovered from its lows, failing to fall through the psychologically key level of 89.00 cents and remaining pinned at its 200-day moving average of 89.25 cents. At the close of the week on November 9, the yen shied away from one-month highs against the dollar in Tokyo, spooked partly by the possibility of the Japanese intervention under 120 yen. The dollar was helped by the demand from the Japanese importers and the talk that speculators were eyeing large buybacks around 120.40/50 yen. After hitting a high of 120.40 yen, the dollar steadied at 120.24/29 yen. The euro was hovering around $0.8892/97 compared with $0.8926 in late New York. Against the yen, it was on the defensive at 106.91/01.