The inter-bank market, this week opened on a negative note as the rupee parity assumed downtrend. However, the fall in rupee value against the dollar was marginal.

Dollar demand increased in the inter-bank market on huge payments on June 23, pressurizing the rupee to shed two paisa. The dollar traded at Rs57.81 and Rs57.83 on the opening day of the week against the previous weekend’s Rs57.79 and Rs57.81. On June 24 the rupee shed one paisa more versus the dollar. At the close of the day it was changing hands for Rs57.82 and Rs57.84. Increasing demand by the banks forced the rupee to yield to the dollar. The rupee almost maintained its overnight levels versus the dollar at Rs57.83 and Rs57.84, amid balanced demand and supply position on June 25. In three days of trading the rupee had suffered four paisa decline against the dollar.

On June 26 stability prevailed in the inter-bank forex market as both the Pakistani rupee and US dollar held their values firm amid balanced demand and supply situation. The rupee did not show any change versus the dollar for buying and selling and remained stable at Rs57.83 and Rs57.84. It recovered three paisa against the dollar on June 27 and revert to the week’s opening day’s level of Rs57.81 and Rs57.83, as demand for dollar eased slightly. At this level, the rupee was only marginally higher when compared with the previous weekend level.

The rupee in the kerb once again crossed Rs58 barrier this week. A downward revision was witnessed in the open market on the week’s opening day as the rupee shed one paisa versus the dollar to trade at Rs57.95 and Rs58.00 on June 23. Hectic demand for dollar in the inter-bank market kept the rupee under pressure. On June 24, the rupee continued its overnight weakness versus the dollar in kerb, losing 10 paisa for buying and selling at Rs58.05 and Rs58.10. Continued demand for dollars in the inter-bank market pressurized the rupee to surrender its value further.

Bearish trend continued in the currency market on June 25 for the third day as the rupee extended its losses, shedding 30 paisa for buying and selling at Rs58.30 and Rs58.40. Thus, the rupee has lost around 45 paisa versus the greenback within two days. Market sources attributed the rupee’s fall to rising demand for dollars in the inter-bank market.

The rupee recovered 15 paisa versus the dollar in the open market for buying and selling at Rs58.17 and Rs58.25, on June 26. The absence of major dollar demand in the inter-bank market helped the rupee to recover lost ground in the kerb. Towards the close of the week on June 27, all-round gains were seen on forex market as the rupee recovered 25 paisa versus the dollar changing hands at Rs57.90 and Rs58.00, respectively.

Against the euro the parity moved both ways amid wide fluctuations during the week under review. The euro, in line with the world market trend, lost 35 paisa in relation to the rupee to trade at Rs66.55 and Rs66.85 on the week’s opening day. But the rupee failed to maintain its overnight firmness on the following day and lost ground versus the euro shedding 25 paisa to trade at Rs66.80 and Rs67.10. On June 25, the rupee recovered its lost ground and revert to its opening week’s position as the euro, in line with international trend, shed 25 paisa changing hands at Rs66.55 and Rs66.85.

On June 26, the rupee gained 30 paisa further versus the euro and traded at Rs66.25 and Rs66.55. The euro continued its weakness versus the rupee on June 27, showing 30-paisa slide versus the rupee to at Rs65.95 and Rs66.25. Thus during the week the rupee was able to maintain its edge over the European single currency and gained upto 105 paisa amid fluctuations over the previous week end close of Rs66.90 and Rs67.25 on June 21.

Against other major currencies at the inter-bank forex counter, the rupee staged smart recovery this week against most currencies. It gained strength over the British pound, the Swiss franc, the Japanese yen, the Danish and Norwegian krones, the Swedish krona, the Australian, New Zealand and Singapore dollars and the Kuwaiti dinar. It, however, slide versus the Canadian dollar and the Malaysian ringgit and stayed unchanged against the Hong Kong dollar, the Chinese yuan, the Saudi and Qatari riyals and the UAE dirham.

In the international financial market, the dollar hit a five-week high against the euro on June 23 as investors viewed economic prospects in the United States as more favourable than in the euro zone, although weak US stocks tarnished the greenback’s advance. The euro fell to $1.1542, a loss of 0.55 per cent, after falling as low as $1.1508, its weakest point since May 16. The euro tumbled more than 1 per cent to 135.83 yen, but held above the session low 135.59 yen. The euro dropped nearly one per cent against both the Swiss franc and Sterling.

Sterling slipped against the dollar and the euro after the Bank of England Governor, Sir Edward George said the pound’s recent fall is helping to cushion Britain from the full impact of global economic weakness. It stood at near the day’s low of $1.6630, having fallen to a 1-1/2 week low of $1.6552 on June 23. It also lost ground against the euro to 69.40 pence from 69.26 in late New York.

On June 25, the dollar narrowed its losses after the Federal Reserve cut interest rates by a quarter-percentage point — a smaller amount than investors bet on — giving the greenback some support. The euro promptly lost much of its gains against the greenback on news of the Fed’s decision. The euro fell to $1.1542 still a gain of 0.30 per cent on the day, but down from the session high $1.1623 hit after the government’s earlier report showing weak US durable goods orders.

The dollar erased all of its losses against the yen rising to a session high 118.16 yen before finishing the day at 117.94 yen, up 0.6 per cent on the day. The dollar hit a session high of 1.3320 Swiss francs but failed to hold the level and dropped to 1.3273 francs, off 0.14 per cent. The British pound rose half a per cent against a broadly weaker dollar and was firm against the euro as investors awaited a key decision on US interest rates. Sterling was trading just below this week’s high at $1.6740 up a cent from the previous New York close. Against the euro, the pound was just a touch firmer at 69.10. So far this year, sterling is up almost four per cent against the euro.

On June 26, the dollar rallied broadly climbing more than one per cent against some major rivals, helped by rising equity markets and expectations of stronger growth in the United States. Late in the New York session, the Dow Jones industrial average rose 0.7 per cent, reinforcing the dollar’s push toward fresh session highs.

Sterling rose to a 10-week high against the euro helped by the dollar’s rebound against the single currency and as the pound’s relatively high interest rates attracted investors in search of yield. The euro fell 0.75 per cent on the day against the dollar as the greenback enjoyed a relief rally after the Federal Reserve opted not to cut rates as sharply as many had expected. The pound was off the day’s high of 68.65 pence per euro but still 0.2 per cent up on the day. Against the resurgent greenback, sterling slid more than half a per cent to $1.6622, nearly three cents below a recent 4-1/2 year high. But it was also holding up better against the dollar than the lower yielding euro and the Swiss franc, which fell 1.5 per cent against the greenback. The pound was also at a three-month high above 101 on a trade weighted basis.

At the close of the week on June 27, the dollar jumped to a two-month high against the yen following a rise in US shares and a smaller-than-expected rate cut by the Federal Reserve earlier in the week. The dollar was at 119.58 yen versus 119.43 yen in late US trade. It briefly hit 119.68 yen, its highest since April 30. Many traders were expecting the greenback to rise further and test 120 yen, but it would likely face heavy selling from Japanese exporters above that mark. The euro was at $1.1434 compared with around $1.1420 in late US where if fell to a one-and-a-half month low of 1.1415. the single currency also strengthened to 136.69 yen versus 136. 34 yen.