The rupee/dollar parity remained under pressure this week. On the week's opening day (June 7), the rupee shed two paisa versus dollar in the inter bank market, changing hands at Rs57.80 and Rs57.82 on corporate sector demand.
On June 8, the rupee further lost two paisa and traded at Rs57.82 and Rs57.85. The rupee, however, managed to recover slightly against the dollar on June 9, to gain three paisa and trade at Rs57.79 and Rs57.81.
The banks made hectic buying of dollars due to oil payments on June 10, and the rupee gave up its overnight firmness, shedding two paisa to changed hands against the dollar at Rs57.81 and Rs57.83.
On June 11, the rupee continued its overnight weakness versus the dollar in the interbank market, losing two paisa at Rs57.83 and Rs57.85. Huge payments before the end of fiscal year dragged the rupee value down and the present trend might continue in the near terms. Over the previous week the rupee in the week under review lost only five paisa against the US currency, amid fluctuations.
In Kerb trading, huge payment requirements ahead of budget and some demand by small investors compelled the banks to make excessive buying of dollars from open market this week.
As the government needed money for payments, the banks were seen buying dollars from the open market this week to meet their requirements. On June 7, the rupee maintained its weekend's rising trend versus the dollar in the open market, gaining five paisa to trade at Rs58.25 and Rs58.35.
Upward trend in rupee value continued in the open market against dollar on June 8. The rupee managed to gain five paisa changing hands at Rs58.20 for buying. It also recovered 10 paisa for selling to trade at Rs58.25.
Slight increase in supply of dollars helped the rupee to sustain its overnight firmness. Increased dollar buying in the interbank markets also forced the rupee to surrender its firmness on June 9. The rupee-dollar parity rates drifted lower, losing five paisa at Rs58.25 and Rs58.30.
Bearish trend persisted in the open market on June 10, as the rupee extended its fall versus the dollar and lost 10 paisa in a single day trading. At close the dollar was quoted at Rs58.35 and Rs58.45.
Rising trend in the oil prices in the global markets caused short supply of dollars. The rupee lost its value sharply due to increased demand by the interbank market.
On June 11, the rupee managed to recover lost ground versus the dollar in the open market, picking up 10 paisa to trade at Rs58.35 and Rs58.40 against the dollar. The recovery in rupee value was due to improved dollars' supply in the market. In the week as a whole, the rupee lost only five paisa despite the erratic trend.
Versus the euro, the local currency maintained its weekend levels for buying and selling at Rs 71.50 and Rs 71.80, on June 7. On June 8, the rupee shed five paisa versus euro and traded at Rs71.55 and Rs71.85. Profit-taking was again witnessed in euro trading as the rupee managed to recover 55 paisa, changing hands versus euro at Rs71.00 and Rs71.30 on June 9.
On the following day, the rupee, however, gained 60 paisa in relation to the euro trading at Rs70.40 and Rs70.70 on June 10. On June 11, the local currency traded at Rs69.85 and Rs70.15 as a result of dollar's appreciation in the international markets. There was again of 55 paisa in rupee value over its overnight level. In the week, the rupee managed to recover 165 paisa against the euro.
In the international financial markets, the yen staged a powerful rally against the dollar and euro on June 7, fired by signs of renewed strength in the Japanese economy.
Preliminary first-quarter data showed Japan's economy grew 1.4 percent, or an annualized 5.6 per cent. Japan is slated to release revised growth figures this week. A nearly 3 per cent gain in Tokyo stocks reflected the likelihood that Japanese assets are benefiting from a surge of inflows from abroad, boosting the yen.
In New York, the yen held most of its gains as trading volumes thinned in a very quiet market. The dollar was down about 1.5 per cent against the yen at 109.53 yen, just above its session lows around 109.50.
The euro lost about 1.1 per cent against the yen at 134.96 yen after hitting session lows around 134.93 yen. The dollar sagged to a two-month low against the euro as last week's US jobs data failed to spur demand for dollar.
The euro hit $1.2338, its highest level in two months versus the dollar before trading at $1.2318, up about 0.3 per cent. The Australian dollar rose about 1.6 per cent against the US currency to $0.7071.
Sterling fell to its lowest level against the euro in almost two weeks as investors booked profits on recent gains ahead of this week's Bank of England interest rate decision.
The pound also briefly climbed close to a two-month high against the dollar on the back of a broad dollar pullback, but lost ground later in the session on rates uncertainty. The pound was steady on the day at $1.8380. It was down from the day's peak of $1.8477, which in turn compared with last week's two month high of $1.8486.
On June 8, the dollar rallied against the euro after Federal Reserve Chairman Alan Greenspan said the US central bank will do "what is required" to keep inflation in check.
In New York, the euro was down about 0.4 per cent to around $1.2265, after the market had digested Greenspan's remarks, made by satellite to a London banking conference. Earlier the euro had touched a two-month high at $1.2351.
Against the yen, the dollar was flat at 109.59 yen, having risen to a session high of 110.13 yen shortly after Greenspan's remarks. The US dollar traded up about 0.1 per cent against the Australian dollar fell to $0.7011.
Sterling shuttled in narrow ranges against the euro and the dollar as investors weighed up the prospects of higher interest rates in both Britain and the United States.
The pound rose within sight of two-month highs against the dollar in early trade as robust house price data bolstered expectations the Bank of England would raise interest rates again this week.
But it eased a cent from its peaks to stand at $1.8350 after Federal Reserve Chairman Alan Greenspan said the US central bank would do "what is required" to keep inflation in check.
The dollar surged across the board as investors bought the US currency on strong expectations the Federal Reserve could raise interest rates more aggressively than previously though.
The dollar built momentum against major currencies after Fed Chairman Alan Greenspan said the US central bank would do "what is required" to keep inflation in check.
The euro crashed below some key technical levels, breaking support around $1.21 and leading some analysts to forecast deeper euro losses. The dollar then regained much of the ground lost and remained steeply higher on the day. In the New York session, the euro traded down a steep 1.7 per cent against the dollar at $1.2044 weakening for the fourth consecutive session.
Japan's larger-than-expected upward revision to its first-quarter gross domestic product and the subsequent demand for yen pushed the dollar to five-week lows earlier in the global day at 108.67 yen. But the dollar had completely reversed against the Japanese currency, trading up 0.6 percent at 110.41 yen.
