The currency market remained closed for three days on account of Eidul Azha. Earlier in the week, the rising demand for the dollar on February 10, had pushed the rupee lower by 3 paisa against the dollar which traded at Rs57.98 and Rs58.01 in the inter-bank market. It ended unchanged on February 14 in the absence of any major trading activity.

In kerb the rupee maintained its rising trend and picked up 5 paisa on the opening day when it traded at Rs57.98 and Rs58.00 against the dollar.

When market re-opened on February 14, after three days of Eid holidays, the dollar was quoted at Rs57.70 and Rs57.80, reflecting a gain of 28 paisa for the rupee.

Against other major currencies, the rupee displayed strength versus the British pound, Canadian, Australian, Singapore and Hong Kong dollars, Swiss franc, Danish and Norwegian krones, Kuwaiti dinar, Qatari riyal and the UAE dirham.

It weakened against Swidish krona and New Zealand dollars and remained unchanged against Chinese yuan, Malaysian ringgit and Saudi riyal.

In the international financial market, the dollar rose on February 10 after Iraq agreed to unconditional reconnaissance flights over its territory to seek out banned weapons, a move scoffed at by the Bush administration as well as traders.

The dollar climbed to a two-month high against the yen a gain of more than 0.85 per cent on the day. Foreign exchange trading will likely be muted on February 11 given Japanese markets are closed for the National Foundation Day holiday.

The dollar made a solid advance in value against the Swiss franc, trading up to 1.3665 francs, a 0.87 per cent rise on the day. While the dollar did make a broad-based advance on the flyover news, most analysts were not deterred from the common view that a war is inevitable.

In the New York session, the euro traded near the session low $1.0727, off 0.85 per cent compared with last week New York close.

The euro dropped to the low immediately after the Iraq’s UN envoy said his country had unconditionally accepted the flyovers and would soon issue a law banning arms of mass destruction.

Early on the euro was under pressure on reports that the German chancellor was trying to prepare the ground at the European level to loosen budgetary restrictions, a move seen by the market as reducing fiscal responsibility. The dollar’s break through $1.0770 and then $1.0730 per euro could set the stage for a test of $1.0690, last week’s low and an area of euro support.

Sterling drove higher against the euro in the wake of better- than-expected data on the UK trade deficit, but was also helped by a dollar rebound that put the single currency on the defensive. The pound had risen half a per cent from late New York levels last week to 65.93 pence. Sterling was fairly flat on the day at $1.6305. The dollar itself was up a third of a per cent against the euro.

On February 11, the dollar extended its broad-based recovery on hopes that a war in Iraq could be delayed, after demands from Russia, Germany and France that diplomacy be given more time. Their calls came as Iraq gave ground by allowing surveillance flights over its territory, although Washington remained adamant disarmament was necessary to avoid war. The greenback shed some of its European gains as early New York players snapped up euros, but was still a quarter point up on the euro on the day at $1.0706, after strengthening beyond $1.07 earlier. The greenback gained roughly a third of a per cent on the Swiss franc and sterling as well and rose slightly versus the yen to 121.38.

The pound had a rough day at the hands of the stronger dollar slipping to a three-week low on the greenback and later losing ground on the euro amid nagging investor concern about the UK economic prospects.

While the dollar was largely driven up by events appearing to push back the likelihood of imminent US-led conflict with Iraq, sterling lost out to the single currency as well as the market fretted ahead of a UK inflation report.

The pound was down a third of a per cent on the day close to the session lows at 6.27 pence per euro. It was 0.5 per cent weaker at $1.6170 but off the day’s lows after the dollar pared gains when Federal Reserve Chairman Alan Greenspan warned uncertainties over Iraq posed “formidable barriers” to the US business spending and growth. But sterling remains four US cents below a three-year high set at the very end of January.

On February 13, the dollar lost one per cent in value against the euro, Swiss franc and Australian dollar on escalating concerns of possible terror attacks against the United States and its allies.

Terror concerns and wariness over diplomatic manoeuvring in the United Nations and Nato over preparations for launching a possible war in Iraq overshadowed some relatively upbeat US retail sales data.

The euro rose to $1.0828, up 1.02 per cent compared with the previous day’s New York close. The euro had been up as high as $1.0858. The dollar fell to 1.3554 Swiss francs, a loss of 1.07 per cent and had been as low as 1.3524 francs. The Australian dollar rose by 1.10 per cent to 59.52 cents. The greenback fell to 120.63 yen, a loss of 0.48 per cent on the day. Sterling held a small gain on the dollar at $1.6188.

At the close of the week on February 14, the dollar succumbed to pressure against major currencies unsettled by war fears ahead of a key report from United Nation weapons inspectors later in the day. With added pressure from better-than-expected Japanese growth data the dollar traded at 120.41/46 in late Tokyo trade from 120.60 in late New York on February 13.

The euro was buoyed at $1.0843/46 from $1.0827. It was at 130.57/65 yen against 130.58 yen.

Sterling slipped against the dollar and held close to its 3- 1/2 year low on the euro ahead of a key United Nation report on Iraq’s weapons due later, with news of another terror alert in London souring sentiment.

Sterling stood at $1.6157, compared with $1.6190 in late New York on February 13.

Against the euro it had fallen to 66.93 pence, near the previous session’s 3-1/2 year low, before trimming losses to 66.76.