THE rupee/dollar parity showed a mixed trend in the inter-bank market during the week ended on February 8.

Absence of major demand from banks, amid thin trading and falling value of dollar in the world helped the rupee to regain strength. It opened the week on a positive note gaining 4 paisa against the dollar, which leaded at Rs60.18 and Rs60.20 on February 4 compared to the previous weekend’s level of Rs60.22 and Rs60.24.

When trading resumed on February 6, after a day’s gap on account of Kashmir Day Holiday on February 5, the rupee slid 2 paisa in thin trading but the parity remained firm at Rs60.20 and Rs60.22 against the dollar. There was not much life in the market due to lack of investors interest.

On February 7, the rupee staged a recovery and made 5 paisa gain leading at Rs60.15 and Rs60.20 against the dollar. It further gained 3 paisa on February 8, over the overnight level. and closed the week at Rs60.13 and Rs60.17, due mainly to lack of demand amid increased dollar supply. Dollar came under selling pressure after the entry of exporters, in the market. During the week the rupee gained 9 paisa for buying and 7 paisa for selling compared to the previous weekend close of Rs60.22 and Rs60.24.

Against other major currencies at the inter-bank -foreign exchange counter, the rupee continued to show strength over the British pound, Canadian, New Zealand, Hong Kong and Singapore dollars, Japanese yen, Chinese yuan, Malaysian ringgit, Kuwaiti diner, Saudi and Qatari riyals and the UAE dirham. It, however, turned week against euro, Australian dollar, Norwegian and Danish krones, Swedish krona and Swiss franc.

The situation in the kerb was not much different. Speculative dollar-selling helped the rupee to gain 40 paisa for buying and 30 paisa for selling on the first day of trading against the previous weekend close. The dollar traded at Rs59.90 and Rs60.10 on February. It continued unchanged due to balanced demand and supply amid sluggish activity in following three days trading at Rs59.90 and Rs60.05. On February 4, the kerb rate was lower than the inter-bank rate, for the first time since September 2000, when the rupee had touched Rs59.70. Earlier, the rupee had touched Rs59.80 in August 98. Lacklustre conditions prevailed in the kerb on February 8, which kept the parity intact at Rs59.90 and Rs60.0, reflecting 40 paisa gain during the week.

As no major development is expected in the next few days the rupee is likely to fluctuate between Rs59 Rs60 in the kerb with inter-bank rate fluctuating between Rs60.10 and Rs60.15. Over the past 12 months, the rupee has shed 90 paisa depreciating by 1.5 per cent against the dollar in the inter-bank market but gained Rs2.25 appreciating 3.8 per cent in the kerb. The dollar was at Rs59.23 in the inter-bank market and Rs62.15 in the open market on February 8, 2001. In the international financial market, the euro rose more than one per cent against the dollar in New York on February 4, establishing a new one-week high as growing anxiety over Corporate America’s accounting practices undercut US stocks and the dollar. The euro topped 87.07 cents. The dollar also fell to a two-week low against the Japanese yen, hitting 132.02 yen.

In Tokyo, the dollar edged up in a thin range but struggled to make headway because of a shortage of fresh factors, other than mixed signals on forego exchange from Japan’s top financial diplomat. Some dealers cited weakness in Japanese equities, particularly bank shares, as a factor helping the dollar, although share weakness was also spurring talk of repatriation, by Japanese, investor to cover losses ahead of the fiscal year-end.

The dollar had clawed up to 133.40/45 yen, off an early low around 132.85 but still some distance from a three-year high of 135.20 seen last week. The euro wavered at 114.90/99 yen and against the dollar at $0.8612/17, a touch softer from offshore levels.

Sterling lost ground against the euro but held steady versus the dollar in London after a fresh survey showed the pace of the UK retail sales growth slowed but remained robust in January sterling was sapped at $1.4175, having spent the entire session drifting in a $1.4186-$1.4144 range. Against the euro, it lost a third of a per cent to stand at 61.02 pence but remained with in hall’ a cent of its one-month highs of 60.66 hit on previous weekend.

On February 5, the US dollar surged against the yen on February 5 as stop-losses triggered act acceleration in dollar buying amid growing investor skepticism about the Japanese government’s ability to implement economic reforms. The dollar climbed as high as 133.80 yen, a gain of more than 1.05 percent compared with previous days New York close. The euro also climbed against the yen, rising more than 1 percent to a one week high of 116.50yen.

In Tokyo, the dollar was suffering a rare bout of nerves as the ever widening Enron scandal and a slump on the Wall Street tested offshore confidence in the US assets. Luckily for the dollar, Japanese assets were in even worse shape with the Nikkei 225 index hitting and 18year low and IGB yields climbing to one-year highs.

The euro was less forgiving and kept the dollar pressed at $0.8700 after rallying almost a cent overnight, a timely bounce for the single currency as it had been in danger of breaching crucial support at $0.8550/60. Dealers emphasized the euro had a lot to prove after it disappointed so many bulls in recent weeks and at the very least needed to clear resistance at $0.8730/40 and a retracement barrier at $0.8765. The mistrust was clear in the euro/yen cross where it was a shade lower at 115.15 yen from 115.23 in New York.

Sterling eroded early gains against the dollar in London but underlying sentiment was positive given an upbeat survey on Britain’s services sector sterling stood at $1.4211, edging back from a high of $1.4247. Against the euro, it stepped back to 61.36 from 61.14 in late New York on February 4. In July, a wave of short-covering saw sterling recover to $1.4353 following its stumble to a 15-year low of $1.3677.

In New York on February 6, the was and wane of the US stock prices pushed the dollar around in tight ranges as investors took a cautions position between upbeat US productivity data and concerns over US accounting practices. The dollar, however ticked slightly higher after the US stocks markets closed at the US auto industry officials said they lobbied President George W. Bush in a letter sent last week that the weak yen was a threat to the US economic recovery.

The dollar cut some of its losses, rising to 133.65 yen from 133.47 yen on the news, but still registered a loss of 0.17 per cent compared with previous day’s New York close. The euro was slipped against the dollar to 86.67 cents, down 0.05, per cent on the day. The euro, however, was closer to opening day’s one-week high at 87.30 cents than to six-month lows at 85.60 cents hit last week. The Euro also suffered losses against the yen, trading to 115.85, yen, down 0.23 per cent on the day.

In Tokyo, the dollar suffered a late stumble against the yen losing its grip on gains uninspired by yet more bad news for Japanese banks. But with the market thirsting for consolidation, the dollar slipped back to 133.70/73 yen on profit-taking by late afternoon, not far from late New York levers. In less than a week, the dollar has surged to three-year highs of 135.20 yen, collapsed back to 131.90, only to rise again to 134.28, gnawing an average daily move of oven two yen. The yen also recouped earlier losses on the euro, with the single currency at 115.73/84 yen from highs around 116.44. The euro eased to $0.8657/59 in thin trade after failing to sustain a rally to around $0.8731 .

In London, sterling eased very slightly against the dollar after the greenback got a lift from equity markets in the US which were buoyed by stronger than expected fourth quarter productivity data. But the pound hardly moved against the euro as markets settled in to wait for the Bank of England’s Monetary Policy Committee’s interest rate decision. The pound was trading at $1.4128 compared with $1.4150 in New York late. One euro, meanwhile fetched 61.27 pence per euro, barely changed on the day.

On February 7, the dollar crept ahead on the yen in Tokyo helped by talk of yet further monetary easing in Japan, while the euro took a knock from the news Germany and Portugal could be shown a red card for their budget deficits. In late trade, the dollar had pushed ahead to 133.96 yen from 133.69 in New York and an offshore low of 133.35. Traders reported offers around 134.35 and suspected that hedging for a slew of options expiring with strikes at 133.00 and 135.00 would tend to keep the dollar within that band. The euro was little changed at 115.92 yen from 115.95 in New York. But it dipped to $0.8654 Prom $0.8674 after European Union Monetary Affairs Commissioner said that “early warnings’ to Germany and Portugal about budget deficits were warranted.

In London, sterling fell a third of a per cent against the dollar and by slightly less against the euro on news that British manufacturing output fell by more than expected in December. Idle pound was trading at $1.4085 compared with $1.4123 late in New York.

In New York on February 7, a tug-of-war in the foreign exchange market kept currencies hemmed in tight ranges against the dollar as investors balanced firmer US stocks prices against an unfolding accounting scandal.

The dollar slipped to 133.62 yen, down 0.05 per cent, ahead of a key policy decision by the Bank of Japan. The auto was unchanged against the dollar at 86.75 cents, compared having traded in a half cent range. The euro also traded unchanged at 115.95 yen against the Japanese currency.