Mixed sentiments were witnessed in local currency market in the week under review. Though, rupee showed some gains in the inter-bank market, parity remained weak as the payment pressure continued in open market.

The demand for dollars persisted as banks were covering their short-term position to clear bills. It was comparatively high for payments in open market, as a result of higher oil prices in the international market.

On the opening day of the week, dollar touched new high at Rs58.34, but later it trimmed its gains to Rs58.26 and Rs58.28 in inter-bank market on July 12. Clearance of most of major payments eased pressure on the rupee on the following day, showing a recovery six paisas versus dollar, which was at Rs58.20 and Rs58.22 on July 13.

On July 14, stability prevailed in the inter-bank market as the rupee held its overnight levels versus dollar at Rs58.20 and Rs58.22. However, the rupee lost one paisa against the dollar over its overnight levels on July 15, as corporate demand for the dollars kept rupee under pressure, which was seen changing hands at Rs58.21 and Rs58.23 against the dollar.

On July 16, demand for dollar-buying persisted in the market, which allowed the rupee to recover its ground. The rupee managed to sustain its overnight levels versus dollars in the inter-bank market after losing one paisa to trade at Rs58.20 and Rs58.22.

Against the previous week close, however, the rupee managed to recover eight paisas versus the dollar in the inter-bank market. Hectic buying of dollars in inter-bank market dragged the rupee down in kerb trading, where it lost five paisas against the dollar, changing hands at Rs58.40 and Rs58.50 on July 12.

The rupee is losing shine in the absence of the State Bank's intervention. On July 13, extending further losses, the rupee shed another five paisas in relation to dollar, which traded at Rs58.45 and Rs58.55.

Stable trend in the inter-bank market on July 14, also mirrored in the open market, where rupee recovered five paisas in relation to dollar, trading at Rs58.40 and Rs58.50.

But then on July 15, the rupee lost five paisas in relation to the greenback. It traded at Rs58.45 and Rs58.55, in line with the inter-bank market trend. The rupee further extended losses versus the dollar on July 16, and shed two paisas for buying and traded at Rs58.47.

It however, gained two paisas on selling, changing hands at Rs58.57. During the week, the rupee lost 12 paisas for buying and seven paisas for selling against the dollar over its previous week close.

The rupee also extended its week-end fall versus euro, shedding 20 paisas over the previous weekend's level to trade at Rs72.20 and Rs72.50 on July 12. The local currency, however, gained 25 paisas versus euro changing hands at Rs71.95 and Rs72.00 on July 13. The rupee further lost 30 paisas and traded against the single European common currency at Rs72.00 and Rs72.30 on July 14.

On July 15, the rupee managed to gain 10 paisas against the euro and changed hands at Rs71.90 and Rs72.20, as the single European currency drifted lower versus the dollar.

On July 16, the local currency lost 20 paisas to euro and traded at Rs72.10 and Rs72.40. Over the previous week close, however, the rupee this week showed a depreciation of only 10 paisas.

In the international financial markets, the dollar clung to tight ranges on July 12, with sentiment bearish ahead of a heavy slate of the US economic data, while the yen, which had firmed on the Japanese elections earlier in the day, gave up its gains.

After the Japanese election results, the dollar fell below 107.60 yen, its lowest level since June 28, before trading at 108.23 yen late afternoon in New York, virtually flat on the session.

The euro scored a fresh four-month high versus the dollar at $1.2436 before trading at $1.2404 in New York. Market volume, however, remained quite thin ahead of a slew of the US economic reports, with the euro trading between $1.2370 and $1.2450 for now, and could potentially push higher.

Against the Swiss franc, the dollar traded at 1.2249 francs after touching a five-month low of 1.2208 francs earlier. Sterling had risen to a four-month high of $1.8662 early in Europe before trimming gains to $1.8630 versus the dollar.

On July 13, the dollar rebounded broadly boosted by news that the US trade deficit narrowed in May by more than Wall Street had expected. The trade gap has been a persistent weight on the dollar for about two years.

In New York, the euro fell 0.66 percent to $1.2328, after slipping to session lows around $1.2301 following the release of the US trade report. Against the yen, the dollar pared some of its gains, trading at 108.62 yen, after news that the Mitsubishi Tokyo Financial and the UFJ groups are set to begin merger talks.

The dollar came off a little bit after that news since the (prospective) merger is viewed by the markets as yen-positive, given prevailing expectations of improved Japanese economic prospects.

Against the Swiss franc, the dollar climbed to 1.2350 francs, up 0.8 per cent. Sterling was down at $1.8563. But the pound slipped from recent four-month highs against the dollar as data showing the United States' trade deficit narrowed in May bolstered the US currency across the board.

But the pound was softer against the dollar at $1.8550, having leapt above $1.8660 on July 12, for the first time since early March.On July 14, the dollar slipped against the euro after the US retail sales data showed consumer spending slowing, which analysts said would keep the Federal Reserve on a path of gradual interest rate hikes.

The euro climbed to session highs around $1.2421, according to Reuters data, before trading back down to $1.2383, up 0.4 per cent. The yen struggled, plumbing a five-week low against the euro as worries over the outlook for the technology sector weighed on Japan's stock market and its currency.

The dollar was up about 0.5 per cent against the Japanese currency at 109.16 yen. The yen also fell sharply against the euro, trading at 135.17 yen. Against the Swiss franc, the dollar was at 1.2290 francs, down 0.5 per cent.

Sterling eased from three-week peaks against the euro as the market digested mixed UK labour market data and a politically-sensitive report into Britain's handling of intelligence on Iraq.

The pound fell to session lows against the single currency. Against the dollar, it was little changed at $1.8580, still within a cent of opening week's four-month high at $1.8662.

On July 15, the dollar climbed as the euro fell to session lows at $1.2329, before trading back up to $1.2351 in New York, down 0.2 per cent. Against the yen, the dollar was trading at 109.78 yen, up 0.57 per cent. The dollar rose 0.6 per cent against the Swiss franc to 1.2367 francs. Sterling fell to $1.8525.

At the close of the week on July 16, the dollar turned lower after briefly rising to one-month highs against the yen as the Japanese currency recovered on the back of a modest rally in Tokyo share prices.

It poked above 110 yen for the first time since June 17 early in the session but hit a ceiling as many Japanese exporters had placed sell orders just above that psychologically important level.

The dollar stood at 109.48/53 yen, down from an early peak of 110.05 yen and from around 109.75 in late US trade on July 15. Downward pressure on the yen was also reduced after China's second-quarter gross domestic product (GDP) figures, which showed that the Asian trade giant's economy grew 9.6 per cent from a year earlier, slightly below analysts' expectations.

The euro, which scored a four-month high of $1.2436 earlier this week, was slightly firmer at $1.2366/71 versus overnight levels of around $1.2350. Sterling leapt to its highest level against the dollar in nearly five months in. It rose more than one per cent to $1.8753, its highest level since late February.