The rupee/dollar parity continued its upward trend for the second consecutive week with gap in the inter-bank market and open-market almost vanishing.
The rupee gained during the week after the State Bank of Pakistan has tightened the rules and regulations in foreign exchange counter to halt the local currency's fall.
The central bank started providing dollars to the banks for clearing oil import payments from November 8, and is strictly keeping check over forward bookings and advance payments. Besides, the market has also received improved dollars supply as exporters started selling their holdings on seeing dollar's slide.
Overseas Pakistanis are also remitting dollars ahead of Eid-ul-Fitr. This is also an added factor behind rupee's firmness versus greenback. As a result, the rupee started recovering lost ground versus dollars and dollars supply has also improved, which is having a positive impact on the rupee.
On November 8, increased demand for dollars from all sides ahead of bank holiday on November 9, being Allama Iqbal Day, forced the rupee to shed five paisa for buying and ten paisa for selling versus the dollar, which was available at Rs59.65 and Rs59.75 on the week's opening day in the inter bank market. The rupee, however, managed to resist further loss due to easy supply of dollars.
All the banks and markets were closed on November 9, on account of Allama Iqbal's birth anniversary. When trading resumed after a day break on November 10, the rupee in the inter bank market began the day on a positive note gaining five paisa over the week's opening level and traded versus the dollar at Rs59.60 and Rs59.65.
On November 11, the rupee managed to sustain its overnight levels in the inter-bank market at Rs59.60 and Rs59.65. The rupee gained 25 paisa over the previous week close.
In the open market, the rupee recovered 40 paisa versus dollar in a single day trading on November 8, changing hands at Rs59.90 and Rs60. The market was closed on November 9, being public holiday.
When the market re opened on November 10, the rupee managed to gain another 30 paisa in terms of dollar and traded at Rs59.60 and Rs59.70, amid sufficient dollars inflows.
The rupee lost 10 paisa against the dollar in the open market on November 11, as the dollar traded at Rs59.70 and Rs59.80. Since the previous week close the rupee has appreciated by 70 paisa against the dollar in the open market.
Against the European single common currency the rupee also picked up 35 paisa changing hands at Rs76.50 and Rs76.80 on November 8. The rupee further extended its gain by 40 paisa more over the week's opening level on euro, which traded at Rs75.80 and Rs76.10 on November 10.
However, failing to maintain its upward trend versus the euro on November 11, the rupee shed 10 paisa and traded at Rs75.90 and Rs76.20. Despite this decline, the rupee managed to recover 105 paisa versus the euro from its previous week close.
In world markets, the dollar showed firmness versus leading currencies as most of the market participants kept on the sidelines ahead of the Federal Reserve meeting early this week. Sentiment on the dollar remains bearish on the opening day of the week, owing to deep-seated concerns over the US current account and budget deficits.
The dollar rallied from record lows against the euro on November 8, after European Central Bank President expressed concern about the swift pace of the euro zone single currency's recent climb.
Earlier in the day, the euro had hit a fresh record high just below the psychologically important level of $1.30. In New York, the euro was at $1.2917, down 0.36 percent after hitting a record high of $1.2985 earlier. The dollar traded slightly lower against the yen at 105.48 yen, having fallen to its lowest since April at 105.30.
Sterling, meanwhile, was nearly flat at $1.8560in New York but in London, it set a new 3-1/2 month high versus the struggling dollar as it came under pressure across the board. The dollar was steady at $1.8570.
On November 9, the dollar drifted higher against the euro after several European officials expressed fears over the euro zone currency's rapid climb. In New York, the euro fell to $1.2898 after surging to a record high at $1.2985 on November 8. It was about 0.1 per cent higher against the yen at 105.65 yen.
In London, sterling was steady at $1.8547, having hit a 3-1/2 month high of $1.8617 a day earlier. The dollar has been under broad pressure in recent sessions due to concerns about the US economy and the growing US trade gap.
On November 10, the dollar gained modestly against the euro after the Federal Reserve raised US interest rates, as expected, but the move did not alter the greenback's overall bearish picture. In New York, the euro fell to $1.2886 after hitting a record high of $1.3005. The dollar rose 1.3 per cent to 107.13 yen after hitting a seven-month low on November 8.
Sterling retreated from a 3-1/2 month high on the dollar overnight and was trading at $1.8475, after a more dovish than expected Bank of England inflation report left the pound vulnerable, which touched a record high of $1.3005 after US trade deficit data showed the gap narrowing but still big enough to cause investor concern.
On November 11, the dollar held gains against the euro and traded near two-week highs versus the yen after data showed the US trade gap shrank and the Fed indicated it would press on with monetary tightening.
Market players said that the euro's rise to the record high immediately after the trade data landed was not so much a reaction to the numbers but a result of highly speculative option-related trade aimed at hitting $1.30.
The euro bought around $1.2885, down more than a cent from the record high and little changed from late US levels. The dollar eased to 106.97 yen from around 107.15 in late US trade. The Japanese currency was at around 137.80 yen per euro after weakening to an eight-month low of 138.29 on November 10.
Sterling fell to a 10-month low against the euro for a second successive day, extending losses made after a dovish inflation report from the Bank of England signalled that interest rates have peaked. The pound was little changed against the dollar at $1.8444 - little changed on the day but bouncing back from a session low of $1.8377.
