The rupee/dollar parity remained almost stable in inter-bank market this week amid slight fluctuations, but the rupee in kerb lost its firmness over the dollar crossing Rs58 barrier on persistent increase in its demand and appreciation in international market.
Despite growing demand for dollars, the rupee maintained its week-end levels in the interbank market on the opening day of the week, trading at Rs57.46 and Rs57.48 on April 19. Demand for dollars is high, but balanced dollar supply restricted any major decline in rupee value on April 20, shedding only one paisa versus the dollar, which changed hands at Rs57.47 and Rs57.49.
Sufficient supply of dollars, amid persistent demand by banks did not allow the rupee to fall over the dollar on April 21. The rupee, somehow, managed to gain one paisa on to its overnight levels versus the dollar to trade at Rs57.46 and Rs57.48, amid modest trading. Despite dollar's surging demand for heavy payments on April 22, the rupee-dollar parity remained intact at its overnight level.
An abrupt rise in the dollar value globally pushed it up in the local market also. The dollar on April 23, crossed the barrier of Rs57.50 in the interbank market as its demand by banks persisted. As a result, the rupee lost three paisas against the and traded at Rs57.49 and Rs57.51. In the week the rupee lost 3 paisas over the dollar.
The rupee remained under pressure in the open market this week, on rising demand for dollars after a modest recovery in the world market. Heavy demand for dollars by leading banks pressurized the local currency.
The rupee in kerb, failed to sustain its weekend firmness, losing five paisas over the dollar changing hands at Rs57.78 and Rs57.83 on April 19. Bearish trend continued on April 20, as the rupee extended its fall versus the dollar, shedding another three paisas at Rs57.80 and Rs57.85.
On April 21, the rupee continued its slide for the third day running versus the dollar in kerb and shed five paisas more to trade at Rs57.85 and Rs57.90. The rupee lost its value on the rising demand for dollars in the inter bank market and partially because of the dollar's appreciation in world markets. On April 22, the rupee suffered a sharp fall versus the dollar crossing Rs.58 barrier. The dollar traded at Rs58.02 and Rs58.08 after 17 paisas decline in rupee value.
The year-end payment requirements by banks and the dollar strength on the back of its rising demand in the international markets have boosted the dollar value against the rupee in kerb.
However, on April 23, supply of dollars eased in the market as a result of profit-taking in its business after a slight fall in the overseas markets. The rupee recovered 12 paisas versus the dollar, which traded at Rs57.90 and Rs57.95. During the week, the rupee lost 17 paisas against the dollar in kerb.
The rupee showed strength against the euro this week. The rupee commenced the week on a negative note, losing 50 paisas at Rs69.75 and Rs70.05 on April 19. It, however, managed to gain 65 paisa on April 20, in relation to euro, which traded at Rs69.10 and Rs69.40. The rise of dollar in world markets pushed the single European currency value lower.
On April 21, the rupee gained another 60 paisas against the euro changing hands at Rs68.50 and Rs68.80. On April 22, the rupee lost 20 paisas and traded at Rs68.20 and Rs69.00 versus the European single common currency.
On April 23, the euro matched with the overseas market trend, recovering 45 paisas against the rupee changing hands at Rs69.15 and Rs69.45. Over the week, the rupee managed to gain 10 paisas versus the euro.
In the international financial markets, the dollar slipped against European currencies but rose versus the yen on April 19 as investors recalculated bets on an accelerated timetable for an increase in the US interest rates ahead of testimony from the Federal Reserve Chairman Alan Greenspan.
After strong US inflation and jobs data, expectations the Fed would raise interest rates sooner rather than later fueled dollar buying, lifting it to a 4-1/2-month high against the euro last week.
In late New York trade, the euro rose 0.15 per cent to $1.2014, nearly 2 cents higher than last week's 4-1/2-month low around $1.1863. The dollar dropped to 1.2899 Swiss francs, a loss of 0.36 percent.
Sterling rose 0.63 per cent to $1.8079. Against the yen, however, the dollar rose 0.64 per cent to 108.43 yen, in a technically driven move. The euro rose more than one per cent against the yen to 130.41, helped by its rally against the dollar.
On April 20, the dollar hit a 4-1/2 month high versus the euro on April 20 after the Federal Reserve Chairman Alan Greenspan said the threat of deflation in the United States was over, reinforcing market expectations that interest rates will rise.
The euro's fell was a slow grind lower on Greenspan's comments taking it to a low of $1.1844 before it climbed back to $1.1857, still a loss of 1.28 percent on the day. The move broke the 200-day moving average support level at $1.1919.
Earlier, the euro fell after a weaker-than-expected German ZEW research institute economic expectations indicator dropped to 49.7 in April against a consensus forecast for a rise to 58 from March's 57.6.
This raised speculation that anaemic growth in Europe Central Bank to cut interest rates. However, the European Central Bank members said that the ECB's outlook for accelerating growth in 2004 and 2005 was intact and historically low interest rates were in line with that assessment.
The dollar rose in New York trade to 108.75 yen, a gain of 0.36 per cent. The dollar rose to a near five-month high of 1.3144 Swiss francs, before easing back to 1.3130 francs still a gain of 1.80 per cent on the day.
The dollar broke above the 200-day moving average resistance point of 1.3070 francs. Sterling dropped 1.23 percent to $1.7855 hit by weaker-than-expected UK consumer prices. The US dollar hit a high of C$1.3579 against the Canadian dollar before easing back to C$1.3568 up 0.95 per cent.
On April 21, the dollar rose broadly after being whipsawed by shifting views on how to interpret the Federal Reserve Chairman Alan Greenspan's comment that he saw no broad inflation pressures.
On April 2o, the dollar rallied after Green span told the Senate Banking Committee he held an optimistic outlook for the US economy and declared the threat of deflation - a major reason behind low official interest rates - was over. But that run-up was cut back by his comments on April 21 that inflation is not yet a threat.
The euro fell to $1.1834, a loss of 0.19 per cent from previous day's New York close. The euro had reached $1.1915 on the initial Green span headlines before drifting lower.
The dollar got a short-term boost from an upbeat assessment on the US economy from the Fed's "beige book" report, an anecdotal summary of conditions in the central bank's 12 regional districts across the nation.
The dollar rose to 109.45 yen, a gain of 0.65 per cent on the day. High-yielding currencies such as sterling fell to $1.7739, off 0.62 per cent, the Australian dollar fell to US$0.7299, off 0.29 per cent; and the greenback rose to C$1.3584, a gain of 0.10 per cent on the day.
On April 22, the dollar fell against the euro but held an edge versus the yen as data pointing to higher inflation and sluggish job gains tempered investors' near-term expectations for a rise in US interest rates.
The dollar rallied this week on the back of comments from various policy makers, chief among them the Federal Reserve Chairman Alan Greenspan, who started preparing investors for an eventual rise in interest rates to counteract the inflation by product of rising economic growth.
