Both inter-bank market as well as kerb trading remained highly speculative during the week. After commencing the week on a dismal note, the rupee regained its lost strength on hopes of peace on war fronts.

On June 3, in while tension on Indo-Pak borders mounted further, the rupee in the inter-ban market shed 6 paisa following rise in dollar demand by some foreign banks. The dollar traded at Rs60.19 and Rs60.21 against the previous weekend’s level of Rs60.13 and Rs60.15.

But this proved short lived as the rupee managed to recover lost ground in the following days. During the rest of the week, the rupee remained fluctuated in narrow band. It gained 3 paisa against the dollar to trade at Rs60.16 and Rs60.18 and remained stable for a day on June 5, trading unchanged at overnight level. With efforts to defused war tension gaining momentum the rupee recovered another 2 paisa on June 6, when the dollar was quoted at Rs60.14 and Rs60.16. Finally the rupee ended the week on a dismal note as foreign banks buying of dollar pushed the rupee, which shed 2 paisa on June 7, to trade at Rs60.18 and Rs60.l9.

In kerb trading, these was an increase in demand for dollar amid continued fear of war between India and Pakistan. The rupee, on the first day of the week lost 15 paisa to trade at Rs60.70 and Rs6-.80 on June 3. However, some positive efforts in sight to defuse war tension on borders helped the rupee to recover 20 paisa in the next three days. On June 6, the dollar was seen trading at Rs60.50 and Rs60.60 amid fluctuations up 5 paisa over the previous weekend close. The rupee did not show any change in the kerb on June 7 and traded at overnight level closing the week at Rs60.50 and Rs60.60.

The present Mend in rupee dollar panty is likely to persist for sometime. However, some currency dealers hopes the rupee to recover more grounds in coming days. Another group of experts still fear that the rupee could fall further against the dollar and might touch Rs61 in the kerb for a short span in next two weeks.

In the international financial market on June 3, good news in the US manufacturing and construction sectors failed to turn back negative sentiment pitted against us assets, causing further losses in the dollar and US stocks. Trading was thin and choppy and expected to remain so until when investors in London, the biggest centre for currency trading, return from holiday for Queen Elizabeth’s Golden Jubilee. The euro climbed as high as 93.96 cents before easing back to trade at 93.77 cents, again of 0.45 percent compared with New York close and below the 15 month high of 94.16 cents reached last week’s.

The dollar slid to 123.66 Yen, near levels where the Bank of Japan intervened to weaken its currency three times in the last two weeks. The dollar traded at 123.74 Yen, off 0.30 percent on the day and up slightly from six month low of 122.77 Yen. The dollar’s slide over recent weeks has produced a broadly stronger yen - a development Japan views as undesirable as it emerges from recession. The dollar’s demise has recently correlated with weakness in US stocks. In late trade, the Dow Jones industrial average fell 2.17 percent; the Nasdaq Composite was off 3.31 percent; and the broader - market S&P 500 stock index dropped 2.49 percent.

Dollar found support against the yen after strong US economic data and on lingering fears of yen-selling intervention by the Bank of Japan. The dollar was at 124.23 yen lithe changed from 124.09 in late US trade on Friday. The BOJ stepped into the market a number of times to sell yen for dollars, the third intervention by the Japanese authorities in just over a week. Some of the intervention occurred late in the Tokyo evening, but dealers said there was no sign that the BoJ acted through banks in New York. They suggested it had placed orders with overnight desks in major commercial banks in Tokyo.

The dollar was squeezed to fresh unlit-month lows against the euro and other major currencies in Asia after another fall in US share prices Quelled worries about a decline in fund flows into dollar assets. Only against the yen did the greenback manage to hold its own as threats of yen-selling intervention by Japanese authorities kept dealers wary of unloading Me US currency. The dollar was little changed against the yen, held hostage by threats of Japanese intervention. It was pinned down near 123.53/58 yen little changed from its late US levels. Against the yen, the Europe’s common currency was slightly fanner at 116.39 yen up nearly a half yen from the same time on June 3.

The British pound felt twits lowest against the euro since October 1999 as the single currency’s gains against the dollar lifted it across the board. In thin trading due to a holiday in London the currency market’s biggest trading centre the euro powered to 64.62 pence, lifted by its surge to new 16-month highs against the dollar, above $0.9450. The dollar felt across the board as concerns over US corporate according practices took a heavy toll on Walt Street, fuelling fears about a decline in fund flows into dollar assets. Most economists believe sterling is still overvalued and would need to fall to around 67 pence per euro before Britain could lock its currency forever against that of its main trading partners. Though the European Central Bank declined comment on the Boj’s yen seeing spree, the euro shot higher against the yen in sympathy with the dollar, buying 116.90 yen, up half a percent on the day. Europe’s common currency traded near 94.25 cents versus the dollar, below its strongest level since late January 2001 hit in Asia trading and up 0.25 percent on the day. Versus the Swiss franc, the dotter was pinned at its lowest since January 2000 around 1.5565 francs.

On June 5, the dollar held just above Japan’s apparent defence line of 124 yen after the Bank of Japan intervened again during New York hours, but traders expect more pressure ahead as investors continue to shun US assets. It stood at 124.00 yen slightly off the late US level of 124.12. The euro inched up to 94.08 cents from 93.92 cents in late New York. It also ticked up against the yen to 116.73 from 115.58.

Sterling ended little changed against the euro and slightly weaker against the dollar as the greenback fought back from 16-month lows against the single currency hit earlier in the week. The pound, in recent days, has been following the dollar lower against the euro. On June 4, it fell to its lowest level against the euro since October 1999 but has since recovered nearly half a penny as the single currency-gave ground to the dollar. Sterling was trading at $1.4563, compared with $1.4583 late in New York. Against the euro, it fetched 64.32 pence, unchanged on the day.

On June 6, the embattle dollar enjoyed a respite as it entered a corrective phase helped by recent dollar buying by the Bank of Japan as well as bids from local investors and overseas speculative accounts. But its medium-term outlook remained clouded by lingering weakness in US asset markets and the renewed popularity of Japanese assets.

The greenback edged up steadily in Asian morning trade after briefly fatting as low 123.75 yen very early in the morning when most Tokyo dealers were still not at their desks and trade, mostly centred on Sydney, was thins The dotter stood at 124.77/82 yen compared with 124.40 in late US trade. It was slightly firmer against the euro, which eased to 93.66/71 cents against 93.85 cents in late US trade. The euro was quoted at 116.86/94 yen compared with 116.82 yen in late US trade.

Sterling fee to its lowest level since October 1999 against the euro a it followed the dollar lower against the single currency, all but ignoring the Bank of England’s decision to leave interest rates steady. The pound fell a far as 64.76 pence per euro driven by the euro’s move higher against the dollar once the European Central Bank rate decision was out of the way, and a fall in US stocks. Sterling was alto trading at $1.4581, barely changed from closing levers in New York.

At the close of the week on June 7, the euro climbed to a four-month high against the yen on June 7 as players preferred the European currency over both a bearish dollar and the Japanese unit, which is clamped down by fears of intervention. The euro rose as high as 117.98 yen on overseas and domestic speculators’ buying. It had weakened slightly to 117.81/87. The single currency also firmed against the dotter at 94.78 cents after briefly touching 94.80, a 17-month high also marked in New York trade.

The dollar, however did manage to make modest gains against the yen at 124.29 yen from around 124.23 in Late US trade. traders saw little room to push up the yen further due to fears the Bank of Japan may step in. The BoJ has intervened four times in the past three weeks, buying the dollar for the yen each time the greenback has fallen below 124 yen. Wariness about BoJ intervention is so strong that the market hardly reacted to Japan’s January-March gross domestic product (GOP) data, which came in slightly above expectations.

The British pound sank to its lowest level against the euro since October 1999 as it followed the dollar down against the single currency. Sterling fell as low as 64.90 pence per euro at one point, suffering as the euro leapt to a 17-month high against the greenback.