Both the inter-bank market and the kerb dealing observed lacklustre trading this week. Leading investors remained in the sideline, while small investors entered the market to sell dollars. In the inter-bank market, parity continued to move in a narrow band.

On the opening day of the week the rupee lost only one paisa for selling while buying remain unchanged. Thus dollar traded at Rs60.13 and Rs60.15 on May 13. On May 14, the rupee gained one paisa for buying and 2 paisa for selling, amid dull activity, to trade at Rs60.12 and Rs60.13. There was no fresh buying of dollar on May 15.

The rupee, however, lost one paisa for selling and the parity ruled at Rs60.12 and Rs60.14. On May 16, the market was tight and though there was some buying of dollar the rupee gained 8 paisa due mainly to the weakening of dollar in the international market. At close the dollar was quoted at Rs60.08 and Rs60.10. The parity remained steady on May 17, amid tight money supply. The rupee, however, showed an appreciation of 5 paisa over the previous week close.

Against other major currencies the rupee at the inter-bank forex counter last week continued to strengthen versus the British pound but displayed weaker trend against the euro, Canadian, Australian, New Zealand and Singapore dollars, the Swiss franc, the Japanese yen, the Swedish krona, Danish and Norwegian krones and the Kuwaiti dinar. It, however, showed a stable trend against the Hongkong dollar, Chinese yuan, Malaysian ringgit, the Saudi and Qatri riayls and the UAE dirham.

In the kerb, the rupee’s upward rising trend continued. It gained 5 paisa against the dollar on May 13, the first day of the week. Though one local and two foreign banks were seen buying dollars to cover their requirements, sufficient dollar supply resisted any fall in the rupee. A weakening dollar in the international market, however helped the rupee to gain. At close the dollar was trading at Rs60.20 and Rs60.30 versus Rs60.25 and Rs60.35 on the previous week close.

Dollar selling pressure in the kerb on May 14, helped the rupee to gain further by 15 paisa over the overnight level. Small investors speculating further weakening of dollar came out with heavy dollar selling, which made the dollar to trade at Rs60.05 and Rs60.15. Rising trend in the kerb persisted on May 15 amid lack of buying interest. The rupee recovered another 5 paisa over the overnight level and traded at Rs60.0 and Rs60.10, a rate below the inter-bank rate and the highest level during the week. However, the rupee shed 5 paisa on May 16, on modest improvement in demand to trade at RS 60.05 and Rs60.15 against the dollar.

Increased tension on Indo-Pak border, however, had an adverse impact on the parity on May 17, and the rupee came under demand pressure. It shed 15 paisa in a single day trading versus the dollar and the parity revert to its previous weekend level of Rs60.25 and Rs60.35.

As no major development is anticipated in the coming week, the rupee/dollar parity is likely to move in a narrow band, with rupee gaining further strength amid fluctuations. Most currency dealers are of the opinion that the weekend upset in the rupee/dollar parity is most likely to be short-lived and the rupee would regain its recent strength as the tension on border subsides. In the past 12 months, the rupee has appreciated by 2.6 percent in the inter-bank market and by 7 percent in the kerb.

In the international financial markets, the dollar clawed back lost ground to make modest against the euro and yen on May 13 as the US stock futures pointed to an improved tone ahead of the Wall Street’s opening. Earlier the dollar had been weak, hovering within spitting distance of recent seven-month lows against the euro and the Swiss franc and within a yen of a two-month through, hit by sharp falls on Wall Street last weekend.

The dollar was slightly above last weekend’s closing levels at 127.67 yen, and almost a quarter percent higher at $0.9117 per euro and 1.5946 Swiss franc. The yen had led the way higher earlier in alias. The yen traded a touch firmer against the euro at 116.40.

The dollar had slipped to 127.26 yen from 127.59 late in New York on May 10 and was threatening to retest two-month lows around 126.76. The yen also edged higher on the euro to 1167.25 yen extending a rally, which saw it, recover from 117.50 per euro to 116.65 late in New York.

Sterling tested four-month lows against the euro but recovered later in the session helped by the dollar’s recovery against the single currency. After tumbling to match four-month lows of 62.60 pence per euro, sterling had pushed into positive territory at 62.40 pence.

But the pound slipped a third of a per cent against the dollar to $1.4592, moving away from seven-month highs above $1.47 scaled earlier this month. Sterling showed little reaction to data showing the price of goods leaving British factories rose by more than expected last month.

The dollar rose by around half a per cent against major currencies on May 14 taking its cue from a strong recovery on the US stock market so far this week. It was broadly firmer in alias after a rally on the Wall Street tamed worries the US economy may not be living up to market expectations for a quick recovery. The dollar also gained at stronger footing as the euro was undermined by a strike by members of the German trade union the IG Metal that is now expanding to Berlin with wage talks between the employers and the union yet to reach.

The euro had dropped to 90.89 cents from 91.12/16 in late US trade on May 13. The dollar strengthened against the Swiss franc, whose safe-haven status lost its shine after tension eased a little in the Middle East. The dollar rose to 1.6000 franc from 1.5954. Against the yen, the dollar rose to 128.22/27 yen, compared with a late US level of 127.81/89 yen, with stop-loss dollar buying triggered at around 128.10 and 128.20. The yen was virtually unchanged versus the euro at 11.47/52 per euro.

Sterling fell to its lowest levels in almost three weeks against the dollar hitting a low of $1.4467 from $1.4566 in late New York on May 13. Against a broadly weaker euro it bounced to 62.33 pence from 62.50.

On May 15, the dollar spiked to a two-week high against the euro in Asia after strong US data and a firm tone in the New York equity market tempered recent misgivings about the US economy. The yen, meanwhile, managed to hold steady against the dollar after news that Japan’s current account surplus vaulted to its second-highest level ever in March.

The market was also caught long of euro/yen, betting that cross was heading higher after a recent push to five-week peaks around 117.49 yen. Instead the euro crumbled to a one-week low around 115.55 yen in Tokyo from 115.98 late in New York, with various stop-loss sales of the euro triggered after it broke below 116 yen earlier in the morning. The yen held its ground against the dollar around 128.45/47 yen compared to 128.51 late in the US.

It traded at $0.9030 per euro, having earlier risen as far as $0.8996. Against the yen, the greenback stood around 0.2 per cent weaker on the day at 128.25. The euro was weak at 115.81, after dipping to 115.50, its lowest in one and a half weeks.

The pound moved lower against the euro but up against the dollar driven by movements in euro/dollar but did not respond to a batch of news from the Bank of England, the prime minister and the statistical office. With the dollar losing ground against the euro, the pound, as it often does, was swayed by movements in the two most heavily traded currencies in the market. The pound was quoted at 62.35 pence per euro and at $1.4538. The euro ease quoted at $0.9064, up more than a third of a percent from New York close.

On May 16, the dollar remained in a right range at 127.69 yen as traders looked to see how the euro would move against the US currency in the European trade. The euro held onto New York gains supported by expectations of an early resolution to the German labour disputes but failed to extend its climb because of a lack of confidence in the long-term strength of the single currency. It stood at $0.9114 little changed from late New York’s $0.9117, but more than a full cent higher from May 15. Against the yen, the euro edged up slightly to 116.39 yen from 116.20 yen in the late US trade.

Sterling ended roughly steady against the euro after briefly popping up to hit its highest level since the start of the year. The pound lost ground to the euro early on, falling through support at 62.60 pence as the single currency spiked higher against the greenback. But it soon met with buyers just below that level and the euro also beat a retreat.

It was trading at 62.48 pence compared with 62.45 late in New York on May 15 and off a five-month high of 62.69 hit earlier in the day. Sterling was also weaker against the dollar in line with the single currency’s losses against the greenback, trading around $1.4565, more than a cent off six-month highs hit earlier in the month.

On May 17, the dollar slipped against the yen at the close of the week on hefty selling from Japanese exporters as expectations for a weaker greenback grew ahead of data seen showing an increase in the US trade deficit. It failed to carry over gains in offshore trade and slipped under 128 yen after facing substantial selling from exporters. The dollar stood at 127.65 yen against late New York’s 128.08 yen.

The euro edged up against the dollar to $0.9125 from 40.9112 in late US trade helped by the dollar’s fall against the yen.