The week noticed a slight release in pressure on rupee in the local currency market. The year-end payments dragged the rupee's value down by 5 paisas versus the dollar at the beginning of the week , and touched the resistance mark of Rs57.50 in the inter-bank market.

All leading banks covered their short-term position and bought nearly $55-60 million for payments at the end of the year exerting pressure on the rupee. The dollar changed hands at Rs57.48 and Rs57.50 on December 29. On December 30, the rupee recovered two paisas in terms of the greenback for buying and selling at Rs57.46 and Rs57.48, respectively. The rupee touched the season's low level at Rs57.52 due to the increased demand for dollars.

On December 31, the rupee recovered six paisas versus the dollar for buying and eight paisas for selling at Rs57.38 and Rs57.40 in the absence of major demand by the corporate sector. The trading in the inter-bank market remained suspended on the first day of the new year 2004, on account of the Bank Holiday.

On January 2, the rupee commenced the new year on a positive note, showing no big variation versus the dollar in the inter-bank market changing hands for buying and selling at Rs57.39 and Rs57.41, up one paisa against Rs57.38 and Rs57.40 at December 31 close. However, over the previous weekend close of Rs57.45 and Rs57.47, the rupee showed a gain of 6 paisas versus the dollar.

In kerb trading the rupee did not show major change versus the dollar for buying and selling on December 29, when the dollar traded at Rs57.45 and Rs57.50. On December 30, rising trend prevailed in the kerb market. The rupee picked up five paisas versus the dollar for buying and selling at Rs57.40 and Rs57.45. On December 31, the rupee closed 2003, with a gain of five paisas versus the dollar for buying and selling at Rs57.35 and Rs57.40.

On January 1, the rupee picked up 10 paisas against the dollar changing hands in the kerb at Rs57.25 and Rs57.35. The rupee on January 2, lost 10 paisas versus the dollar to trade at Rs57.35 and Rs57.40. It fell on increased demand for dollars. However, the rupee in kerb showed an appreciation of 10 paisas over the dollar when compared to the previous week end's level.

Against the euro, the rupee lost 25 paisas for buying and selling at Rs71.47 and Rs71.78, on December 29. The rupee lost another 15 paisas on December 30, versus the euro changing hands at Rs71.62 and Rs71.92, due to the single European currency's surge in the world markets. The euro crossed the barrier of Rs72 in the kerb market on December 31, and after gaining 18 paisas traded at Rs72.10 and Rs72.40. The single European currency recorded gain in the local market following its strength in world markets versus dollar and yen.

The rupee, however, shed 15 paisas versus the euro for buying and selling at Rs71.95 and Rs72.25 amid thin business on January 1. The euro, however, recovered overnight gains in terms of the rupee for buying and selling at Rs72.10 and Rs72.40 on January, a 15 paisas loss in rupee value in relation to dollar. Over the previous wee end close the rupee in the week under review shed 90 paisas versus the European single common currency.

On the international front, the ailing dollar on December 29, hit record lows against the euro beyond the key $1.25 level and shed half a per cent versus the yen on security worries and nagging concerns over the US current account deficit. In thin holiday trade, the euro climbed as far as $1.2511, breaking through an important psychological level at $1.2500.

The dollar also hit an 11-year low against sterling and came within sight of last week's seven-year low versus the Swiss franc. the euro was up by 0.6 per cent on the day at $1.2499, up more than 19 percent since the start of the year. Against the yen, the dollar was down 0.5 per cent at 106.89 yen, just above a three-year trough around 106.75 yen, with the market wary that the Japanese authorities could intervene to check further dollar weakness.

Against the Swiss franc the dollar was at 1.2477 francs, down 0.5 per cent on the day. The pound was up 0.2 per cent at $1.7753, after hitting 11-year highs above $1.7762 earlier in illiquid holiday season trade. The British pound rose to its highest level against the dollar since October 1992. In London, Sterling pushed as high as $1.7770 in holiday-thinned European trade, surpassing last week's high of $1.7760 and bringing its gains since the start of the year to more than 10 per cent.

On December 30, the dollar plumbed new troughs following an array of weaker than the expected US economic reports, hitting fresh record lows against the euro and multi-year lows against sterling and the Swiss franc. In New York, the euro was up 0.3 per cent on the day to $1.2525, after hitting fresh record highs around $1.2530. The dollar hit seven-year lows against the Swiss franc around 1.2435 francs before trading at 1.2450 francs and was trading not far above a three-year low on the yen.

Against the yen, the dollar was down 0.1 per cent to 106.92 yen. The pound hit new 11-year highs and was trading up 0.4 per cent at $1.7800. Sterling stood at $1.7783 per dollar. The latest surge has brought sterling's gains against the ailing dollar this year to more than 10 per cent. The greenback fell to a record low against the euro of $1.2520 and hit its weakest level in seven years against a basket of currencies.

On December 31, the dollar hit an all-time low against the euro on the last day of the year 2003, shrugging off US economic data as concerns about possible attacks in the United States during New Year celebrations intensified selling pressure. The dollar fell to record lows around $1.2647 per euro, bringing its losses this year to more than 17 per cent. It also hit its lowest level in six years against the Australian dollar and New Zealand dollar and hit a 10-year low versus the Canadian dollar below C$1.2900.

Against the yen, the dollar hovered just above recent three-year lows. The dollar was virtually flat at 107.01 yen. The Swiss franc was at 1.2336 francs against the dollar, down 0.7 per cent on the day. The pound rose 0.9 per cent to $1.7923. The British pound finished 2003 with a flourish, rising to an 11-year high against the weakening dollar for the third day in a row and notching up a gain of 11 per cent over the 12 months.

Analysts said that after charging up nearly one per cent to $1.7942, sterling was on course for $1.80 in the new year, a level unseen since the aftermath of Black Wednesday in 1992 when the pound fell out of Europe's exchange rate mechanism.

At the close of the week on January 2, the dollar hit three-year lows against the yen and wobbled against the euro, the first full trading session of 2004, as worries about the US current account deficit continued to undermine the greenback. But the US currency steered clear of record lows against the euro set on December 31, held above water by strong weekly jobless claims data two days ago and by market relief there were no major attacks in the West during the New Year celebrations.

The dollar also hit six-year lows against the Australian dollar and New Zealand dollar, with the Australian and New Zealand currencies boosted by strong commodity prices and relatively high interest rates.