THE rupee-dollar parity assumed downward trend in the inter-bank market this week. It opened the week on a negative note. Changing scenario on the US-Afghan war front and the American plane crash in New York exerted pressure on the rupee.
The rupee scorns to have lost its month-old credibility due to emerging demand for the dollar. It lost 8 paisa aver the previous weekend close to trade at Rs61.13 and Rs61.18 against the dollar on November 12, amid mixed trading. It extended furler losses on November 13 and 14, cumulatively shedding 7 paisa in two days. Though importers entered the market to make fresh buying but the supply was short as exporters kept themselves on the sidelines. The dollar was quoted at Rs61.20 and Rs61.25 on November 14, against the previous day’s close of Rs61.15 and Rs 61.20.
The rupee remained stable on November 15, despite continued dollar-buying by the banks. The balanced demand-supply position restricted further decline in rupee-dollar parity, which traded unchanged at previous day’s level of Rs61.20 and Rs6].25. Slight drop in demand for dollar on November 16, helped the rupee recover five paisa to trade at Rs61.15 and Rs61.20 against the dollar. It, however, registered a fall of 10 paisa over the previous weekend close.
Against other major currencies at the inter-bank counter, the rupee during the week continued to display strength versus the British pound, German mark, euro, Swiss, French and Belgian franc, Dutch Builder, Danish and Norwegian krone, Swedish krona, New Zealand and Singapore dollar, Italian lira, Austrian schilling, Spanish peseta and Japanese yen. Its weakness persisted over the Canadian, Australian and Hong Kong dollars, Chinese Wan, Malaysian ringgit, Kuwaiti dinar, Saudi and Qatari riyals and the UAE dirham.
In kerb trading, the parity remained fluctuated, but the rupee managed to hold ground versus the dollar making slight gains. It opened the week on a positive note and crossed Rs60 barrier touching new highs at Rs59.9S and Rs60.15 on November 12. However the rupee failed to hold ground after the news of the American plane crash on November 13. The crash report generated strong demand for the American currency, which gained 55 paisa to trade at Rs60.50 and Rs60.70. The rupee extended further, losses on November 14, when emerging demand for dollar pushed it sharply to fresh lows at Rs62.40 and Rs62.60 down Rs2 against the dollar. At this level kerb dollar rates once again crossed the inter-bank rates, after remaining lower for more than a week. Strong dollar-buying by banks for making heavy payments exerted downward pressure on the rupee.
Slight improvement in dollar supply due to lower demand restricted further decline in the value of rupee. The rupee managed to hold ground making sharp gains of 100 paisa against the dollar on November 15, which made the dollar to trade at Rs61.40 and Rs61.60 during the day. It ended the week unchanged at overnight level. The rupee still showed a depreciation of Rs1.40 over the previous weekend close. At this stage it is difficult to predict about the future of the rupee/dollar parity, which is most likely to remain fluctuated. However some currency analysts foresee a weaker rupee in the coming week.
In the international financial market, the US dollar tumbled to one-month lows against the yen in New York on November 12, after news that an American Airlines aircraft crashed in New York en route to Santo Domingo, just two months after the September 11 attacks on New York and Washington. The US currency dipped as low as 119.73 yen after news of the crash, matching lows hit on October 10.
The dollar ticked up towards the end of a sluggish day’s trade in Asia supported by a reminder that the yen’s recent rise is testing the limits of Japanese tolerance. The US currency was bid at 1.20.51. yen in late afternoon trade, just higher than 1.20.35 yen at the end of the last week in New York, with stops rumoured around 120.60.
The sterling rose a quarter per cent to session highs against the dollar and shed about a third of a per cent against the euro in London following reports of a plane crash in New York. The news sent the US currency sharply lower across the board. Sterling rose to the day’s highs around $1.4620 before trimming gains to around $1.4595. The pound stood around 61.40 pence per euro against a generally firmer euro.
On November 13, the dollar rose to its strongest peaks in two months against the Swiss franc in New York with dealers sending the US currency soaring on the news that Afghanistan opposition forces had entered the capital city of Kabul. All major currencies were sent reeling against the greenback as markets unwound risk aversion trades garnered in recent days. In Tokyo, the dollar rallied with the market relieved following reports that the airliner crash in New York seemed unlikely to be a follow-up to the September 11 hijack attacks. The dollar duly climbed to 120.88 yen from 120.40 in late New York trade, putting it well above a one-month low of 119.69, immediately after the crash. In London, sterling floundered to its lowest level in two weeks against the dollar after the news Afghan opposition forces had entered the capital city of Kabul boosted the greenback across the board. The pound buckled to $1.4403, staging its biggest one-day losses in more than a month. It rose to 10-week highs of 60.97 pence against the broadly weaker euro, up half a per cent on the day.
On November 14, the dollar shed some of its offshore gains in Tokyo as optimism that the US-led military action in Afghanistan could come to a quick end started to fade. The dollar climbed to a fresh one-week highs against the yen at 121.80 yen, but later slipped below late New York levels. Against the yen, the single currency struggled to hold above the 107 mark. It was bid around 107 in late morning.
The pound recoiled to a two-week low against the dollar in London on a double blow of a Bank of England warning on the sterling’s downside risk and a record rise in the US retail sales which buoyed the greenback. The sterling came under further pressure after a record rise in the US October retail sales, driven by strong auto sales. It had delved as low as $1.4352, bringing its losses to nearby two per cent in just three sessions. Even against the broadly weak euro, it eased to 61.26 pence having hit a 10-week high of 60.94 pence earlier. The dollar extended gains to three-month highs against the euro and two-month peaks against the Swiss franc in New York after a report showing a record rise in the US October retail sales, driven by strong auto sales. The euro traded as low as X7.77 cents against the dollar, down about 0.3 per cent on the session. The Swiss franc fell to fresh two-month lows against the dollar, extended gains against the yen to 121.90 yen, up 0.25 per cent.
On November 15, the dollar held near three-month highs against the euro, rallied to a two-week high against the yen and hit a three-week peak against sterling on lifted by hopes the US economy has stopped deteriorating and is poised to rebound. The yen posted sharp losses across the board, falling 0.66 per cent against the dollar to 122.35 yen, bringing its decline for the week to 1.63 per cent. The euro traded at 88.20 cents against the dollar, down 0.10 per cent on the day, but above its session low of 88.02 cents. The euro is down 1.4 per cent against the dollar this week. The sterling fell to three-week lows against the dollar, slipping nearly 0.65 per cent on the day to $1.4320 from the prior New York close after the British data showed October retail sales posted the first decline since April 2000.
The dollar was prodded out of a narrow trading band in Tokyo, after traders reported hearing rumours that Osama bin Laden had been captured or killed. The dollar climbed to a two-week high around 122.27 yen from 121.60 as the rumour circulated, but the dealers remained cautious and the greenback later slipped back to around 122.00. The euro also slipped slightly to trade around $0.8800 on the Osama bin Ladin rumours, but pushed up again to around $0.8825 in late afternoon.
Against the yen, the euro was trading around 107.6Q in late afternoon, compared with around 107.30 in early morning. There was some vague talk in the markets that the euro owed its relative resilience to central bank buying.
