During the week in review, Pakistani rupee came under slight pressure but managed to limit any major decline in value in relation to dollar.

The parity assumed down trend in the interbank market on June 30 on increased dollar buying by banks, which kept the rupee under slight pressure ahead of the bank holiday on July 1. The rupee lost eight paisa over the previous week previous week end’s level of Rs57.76 and Rs57.78 and traded at Rs57.84 and Rs57.86 versus the dollar on the opening day. When trading in the interbank resumed on July 2 following Bank holiday on July 1, the rupee opened the market on a positive note and gained 2 paisa for buying and 4 paisa for selling to trade at Rs57.80 and Rs57.82 against the dollar.

There was no major demand for dollar in the interbank market on July 3. The rupee did not show any change in its value versus the dollar and remained stable at its overnight level. On July 4, major dollar buying remained absent in the interbank market. However, the rupee showed modest gains amid thin business. It revert to its previous week end’s level of Rs57.76 and Rs57.78, after gaining three paisa for buying and 4 paisa for selling.

In kerb trading, the rupee opened the week on a negative note on June 30, as it came under demand pressure. But sufficient dollar supply restricted any major decline. The rupee shed only 5 paisa against the dollar and traded at Rs57.80 and Rs57.90. On July 1, rupee moved both ways losing 2 paisa for buying but gaining 3 paisa for selling, amid modest increase in dollar demand on the day, and traded at Rs57.82 and Rs57.87.

The rupee remained weak on July 2, as continued demand for dollar pushed the rupee down further shedding 8 paisa to trade at Rs57.90 and Rs57.95. The downtrend continued on July 3, when the rupee shed another 10 paisa during the day to close the dollar at Rs58.0 and Rs58.05. The rupee was stable on July 4, despite high inflows of dollar and traded at its overnight level. During the week, the rupee in the kerb lost 20 paisa against the dollar.

The rupee, however, failed to maintain its strength over the European single currency during the week. It remained unchanged on the week’s opening day and traded at its previous weekend close of Rs65.95 and Rs66.25 for buying and selling. On July 1, the rupee, however, suffered a major decline. It lost 55 paisa against the euro and traded at Rs66.50 and Rs66.80. The rupee lost another 5 paisa on July 2, against the euro which traded at Rs66.55 and Rs66.85 at close. The parity assumed upward trend on July 3, when the rupee managed to gain 45 paisa and traded at Rs66.10 and Rs66.40 versus the euro. The rupee lost 10 paisa on July 4 and traded at Rs66.20 and Rs66.50 against the euro, bringing cumulative loss in rupee value to 25 paisa in the week.

On the international financial front, the dollar turned mixed on June 30, displaying pockets to strength amid a sluggish trading environment after a report showed manufacturing in the American heartland grew at a weaker than expected pace in June. After last week’s smaller-than- expected cut in benchmark US interest rates by Federal Reserve, the implicit message of a US economy on the mend has helped fuel a dollar rise, but the market is looking for confirmation of that view.

The euro bounced up from support at $1.1400 close to a six-week low to $1.504 before trimming back to $1.1489 a gain of 0.5 per cent from last week. The dollar slipped from near session highs against the yen trading down to 120.05 yen up 0.38 per cent, but below the two month high hit earlier in the session of 120.23 yen. The dollar’s gains against the Swiss franc were cut back as well trading to 1.3535 francs a gain of 0.37 per cent on the day after trading as high as 1.3612 francs. Sterling turned around and headed higher against the green back as well, trading at $1.6528 up 0.22 per cent, after hitting a low of $1.6457.

Since the euro’s rally against the US dollar has faltered in the past month, some of the high yielding “commodity currencies” look poised to become even more highly prized alternatives to the greenback. The Australian, New Zealand and Canadian dollars have made meteoric gains, including the Australian dollar’s 20 per cent climb year to date against the US dollar. These currencies are basking in the attraction of their government bonds, higher yields and relatively strong economic growth outlooks by comparison with the United States.

The euro which has struggled to move higher since hitting record peaks at $1.1932 against the dollar in late May, is starting to lose some appeal for global bond investors hoping to collect an additional fillip from the single currency’s climb. In NEW York, the euro was trading below $1.16 on July 1. As the pace of the US dollar decline against the euro decelerates, much of any additional US dollar depreciation will manifest itself against the Australian, Canadian and New Zealand dollars said John Rothfield, currency strategist with Bank of America in San Francisco.

The yen edged down against the dollar on July 1 erasing gains made on a stronger than expected taken survey and a boost in Tokyo share pries, as Japanese government bond prices fell to a four month low. The greenback fell to a session low of 119.23 yen following an upbeat Bank of Japan (BoJ) tankan survey. It was 119.72 yen in late New York.

Sterling slid nearly half a penny against the euro after new Bank of England Governor left markets thinking a rate cut might be the result of his first policy meeting as central bank head next week. Sterling weakened as far as 10 day lows of 69.88 pence from the day’s highs of 69.42 pence, which it hit early in the session. It was trading down a quarter per cent on the day compared with the previous session’s close. Against the dollar, it was up half a per cent on the day at $ 1.6630 helped by greenback losses in the wake of a report by the Institute for Supply Management showing US manufacturing activity was subdued in June.

On July 2, the yen surged against the euro and gained ground against the dollar after rising Tokyo stock prices sparked optimism for Japan’s economy. But strategists said the yen’s gains are really a sideshow in a thin market ahead of US jobs report. The euro tumbled 1.04 per cent against the yen to 136.65.

The dollar came away with a less severe decline, dropping to a session low 118.53 yen off 0.70 per cent. The greenback’s decline against the Canadian dollar accelerated after Vancouver was awarded the 2010 Winter Olympics. It fell to C$ 1.335 before trimming back to $1.3386, still a loss of 1 per cent on the day.

Sterling shuttled in familiar rangers against the euro and the dollar with investors reluctant to take big positions ahead of key US jobs data and a British interest rate decision next week. The British currency was virtually unchanged on the day at $1.6630. It was up a quarter per cent against the broadly weaker euro at 69.33 pence.

Bulls and bears ducked it out in the currency market as conflicting reports on jobs and the service sector pulled the dollar first lower, then higher, in a spat over which way the US economy is headed. Some investors dumped the greenback after a disappointing June US jobs report squashed budding optimism for an economic recovery that earlier lifted the dollar against major rivals. The euro traded at $ 1.1515, a loss of 0.19 per cent from previous day’s New York close, whipsawed by the data that sent it from a session high $1.1540 from a low of $ 1.1435. The dollar traded near the session low 117.89 yen, down 0.17 per cent, after bouncing in and out of the plus column.

Sterling touched its highest level for a week on the euro and the dollar benefiting from perceptions that while the UK interest rates might still fall, the British economy was wearing relatively well. Stronger than expected services sector data fuelled renewed debate over whether the Bank of England would lower interest rates either next week or in August. The euro shed half a per cent against the pound to 68.85 pence matching its loses against the dollar and closing in on last week’s two-month low at 68.58 pence. The pound was trading just below the week’s high of $ 1.6742 as the greenback was buffeted by the mixed data.under dollar pressure