The falling trend in rupee/dollar parity persisted in the inter-bank market where demand for dollar, amid modest activity, exerted slight pressure on the local currency this week.

The week opened with two paisa loss in rupee value against the dollar, which traded at Rs57.77 and Rs57.79 on September 1. The parity moved down further in a narrow band shedding 3 paisa in three days trading to close at Rs57.80 and Rs57.81 on September 4. However, at the end of the week, the rupee recovered 3 paisa, as there was lack of dollar buying interest on September 5. The dollar was seen changing hands at Rs57.77 an Rs57.79 on the day, reflecting only 2 paisa loss over the previous weekend close.

In the kerb, however, the parity moved both ways after opening the week unchanged at Rs58.15 and Rs58.25 on September 1. Increase in dollar supply, amid moderate activity on September 2, helped the rupee to recover 5 paisa with the dollar changing hands at Rs58.10 and Rs58.20. But failing to hold its firmness on September 3, the rupee lost 5 paisa to trade at Rs58.15 and Rs58.20. On September 4, increase in dollar buying continued exerting slight pressure over the rupee which lost another 2 paisa and traded at Rs58.17 and Rs58.22. When compared with the previous weekend close, the rupee this week showed a loss of 2 paisa for buying but a gain of 3 paisa for selling. Towards the end of the week the rupee managed to regain slight strength over the dollar after it shrugged off its past two days weakness and recover 3 paisa on September 5, to trade at its previous week end’s level of Rs58.15 and Rs58.25.

The euro opened the week unchanged at its previous weekend level of Rs63.70 and Rs63.90 and then lost 80 paisa on the second day trading with the European single currency changing hands at Rs62.90 and Rs63.15. The rupee touched its highest level against the euro on the third day following 15 paisa decline in the European single currency, which traded at 62.75 and Rs63.0 against the local currency. On September 4, the rupee failing to maintain its firmness over the euro lost 10 paisa and traded at Rs62.90 and Rs63.10 against the euro, reflecting 20 paisa gain over the previous weekend close.The week ended with 55 paisa loss in rupee value on September 5, when the euro was quoted at Rs63.45 and Rs63.65, still reflecting a gain of 25 paisa in rupee compared to the previous week close of Rs63.70 and Rs63.90.

The rupee had touched all time lows against the euro at Rs68 in May since then its has improved significantly and touched fresh high this week at Rs62.75, up Rs5.25 in almost 3 months.

Against other major currencies the rupee at the interbank forex counter lost ground versus the Canadian and Australian dollars, the Swiss franc, the Danish and Norwegian krones, the Korean won, the Thai bhat and the Kuwaiti dinar. It showed further gains versus the New Zealand and the Singapore dollars, the Malaysian ringgit, the Saudi and Qatari riyals and the UAE dirham. However, it stood unchanged against the Chinese yuan and the Hong Kong dollar.

In the international financial market, the yen held near multi month highs versus the dollar on September 1, benefiting from a surprise announcement late last week that Japan had not conducted yen-selling intervention in August. That revelation stoked speculation Japan may have refrained from intervention ahead of talks between top Japan officials and the US Treasury Secretary who has said that intervention in general is not a good policy. Many traders remained wary, and were reluctant to bid the yen too high.

The yen has been rising both against the dollar and the euro since mid-August due to growing yen demand from foreign investors wanting to buy the Japan stocks. Despite that, Japan conducted no yen-selling intervention in the month to August 27 — a stunning move after Japan had aggressively intervened to sap the export damaging yen’s strength, selling a record nine trillion yen (77 billion) so far this year.

The dollar was trading around 116.65/68 yen down slightly from around 116.75 yen in late US trade last week, and about a half cent above a three-month low of 116.15 hit in New York on August 29. The euro was at 128.40/50 yen nearly flat from around 128.40 at the end of last week. It also kept some distance from previous weekend’s five months low around 126.75 yen. The common currency edged up versus the dollar to $ 1.0985 in the late US trade.

The pound fell to its lowest for a year against the strengthening yen and slipped half a per cent against the dollar in holiday thinned trade. The pound fell 0.5 per cent to $1.5698, coming within a cent of last week’s four-month low against the dollar. It slid 0.4 per cent to 69.84 pence per euro and touched its lowest level since last September against the yen at 182.62 yen.

The yen rose versus the dollar and euro as investors tested the resolve of the Bank of Japan to hold its currency’s strength in check after a slew of currency policy comments from Washington and Tokyo. The dollar fell below the critical 116 yen level — a 3-1/2 month low — while the euro dropped below the 126 yen mark — a fresh 5-1/2 month low — during the New York session after the White House reiterated that currency rates are best set by markets and intervention should be kept to a minimum.

The dollar fell to 115.84 yen before quickly rebounding to 116.20 yen, still a loss of 0.30 percent from the previous close. The euro hit a low of 125.86 yen off more than 1.5 percent on the day. The dollar’s strength against the euro came largely during the Asian trading session, only making marginal session highs in New York. A stronger than expected manufacturing report from the Institute for Supply Management failed to spark a dollar rally. After the ISM report the euro strengthened slightly, but has since lost the ground to trade at $1.0836 off 1.17 per cent on the day. The dollar’s climbed to 1.4154 Swiss francs a rise of 1.07 per cent on the day.

Sterling rose against euro as the buoyant British data brightened prospects of an economic recovery in the country. The pound earlier losses against the dollar, which had driven sterling close to last week’s four-month low. Sterling had gained nearly one percent against the euro on the day to 69.14 pence. Against the dollar it was trading at $1.7518 after falling to $ 1.5622, close to last week’s $1.5616 last week.

The dollar slopped against major currencies in a pullback driven in part by technical factors as the euro firmed across the board. The greenback firmed only slightly against the euro and remained lower on the day, soon after the Federal Reserve’s Beige Book report said that the US economy continued to expand during the summer, but noted continuing slackness in labour markets. The single European currency drew support from a brisk bout of euro buying against the yen.

After falling within a few whiskers of the 125 yen support area earlier in the day, the euro reversed direction breaking above a resistance area between 125.55 and 125.60 yen. The push of the US stock to new peaks following their 14-month highs on September 02, is a potential plus for the dollar, provided that investors snap up the US stocks in the hopes that a rebounding economy will push corporate profits higher. Against the euro, the dollar rose too far, too fast over the past few days and it is staging a bit of a pullback.

In New York , the euro was at $1.0845 against the dollar, up 0.40 per cent on the day. Earlier, the euro had weakened as far as $1.0767, its lowest since April and down 10 per cent from record highs set in June. The dollar was at 115.99 yen against the Japanese currency, down 0.4 per cent, not far above 3-1/2 month lows around 115.80 yen set on September 2. Against the Swiss franc the dollar was at 1.4125 francs, down 0.5 per cent. The pound was at $ 1.5714, up 0.3 per cent.