MARKET sentiments remained subdued this week. Currency dealers saw lack of interest prevailing in the market, where investors were hesitant to invest in dollars due to its weakness in international market.
In fact high sentiments prevailing in the stock market where the index reached historic highs attracted major investors shifted their investments from the currency to share business.
In the local currency market, the rupee/dollar parity opened the week on a stable note, amid easy supply of the American currency this week. The rupee did not show big change versus the dollar over its previous week’s level, trading at Rs59.34 and Rs59.36 in the inter bank market on March 7.
On March 8, the trend prevailed with the parity remaining almost unchanged. The rupee held versus the dollar at Rs59.33 and Rs59.35 in modest trading, up one paisa on its overnight levels. On slight increase in the dollar demand for meeting payments during the January- March quarter on March 9, the rupee, however, failed to sustain its firmness and shed two paisa over it’s over night levels, with the dollar changing hands at Rs59.35 and Rs59.37.
On March 10, the rupee held its overnight levels versus the dollar in the inter-bank market and traded unchanged at Rs59.35 and Rs59.37. On March 11, the general trend was firm. Balanced demand and supply of the dollar helped the rupee to maintain its stable trend. The rupee-dollar parity did not show any change and traded at Rs59.35 and Rs59.37 for the third consecutive day this week.
In the open market, the rupee managed to gain modest ground on the week’s opening day on March 7. It recovered five paisa against the dollar over the previous week close and traded at Rs59.52 and Rs59.57.
The rupee in the kerb dealings extended further gains over the dollar on the back of its smooth supply on March 8, and recovered two paisa over its over night levels to trade at Rs59.50 and Rs59.55.
On March 9, the rupee/dollar parity in the open market remained stable, showing no change over its overnight levels. The parity continued to show stable trend on March 10. The rupee remained unchanged at Rs59.50 and Rs59.55. In a modest activity on March 11, the rupee maintained its overnight levels at Rs59.50 and Rs59.55 for the fourth consecutive day this week.
Against the euro, the local currency, however, managed to gain 25 paisa on March 7. It traded at Rs78.50 and Rs78.80. This recovery proved short lived, as the rupee suffered a fall of 20 paisa in the early trading session on March 8, to trade at Rs78.70 and Rs79.0.
Before the close of the day, the rupee, however, revert to its previous day’s levels, gaining 20 paisa versus the euro. At close the rupee was trading at Rs78.50 and Rs78.80 against the dollar.
On March 9, euro managed to gain fresh ground versus the rupee as dollar weakness prevailed in the international market. Initially the European single common currency gained 60 paisa against the rupee to change hands at Rs79.10 and Rs79.40 in the morning session. However, the rupee trimmed some losses towards the close of the day and stood at Rs79.05 and Rs79.35 versus the euro, after gaining five paisa.
On March 10, the rupee could not resist further decline of 60 paisa in its value against the euro, which managed to breach Rs79 barrier and touched new lows. During the day the euro was seen changing hands at Rs79.70 and Rs80. The rupee showed firmness on March 11, as it recovered five paisa versus euro, trading at Rs79.65 and Rs79.95.
On the international front, the dollar rebounded on the week’s opening day, as investors considered that last weekend’s hefty sell off was overdone, prompting them to buy back at lower prices. The dollar had slumped last week after the February US non-farm payrolls report showed an increase in jobs.
On March 7, the dollar was up 0.4 per cent at 105.18 yen. The euro was down 0.2 per cent at $1.3207 and sterling was off at $1.9136, in New York. It lost more than half a per cent against the dollar.
Against the Swiss franc the dollar gained 0.6 per cent to 1.1753 Swiss francs. The euro had surged to record highs above $1.36 in December as markets worried that the huge US current account deficit would only be alleviated by further weakness in the dollar.
On March 8, the dollar tumbled across the board, driven lower more by technical than fundamental factors, but with concerns about the dollar’s longer-term structural problems still weighing on sentiment. Ahead of the US trade and capital flows data for January, traders pushed the dollar down through technical support levels against several currencies, which accelerated its downward momentum.
In New York, the euro was up around 1 percent on the day at $1.3341, having traded at a new two-month high of $1.3362 earlier in the session. The dollar was down 0.5 per cent at 104.69 yen, and posted heavier losses against other currencies, losing more than one per cent to trade at 1.1615 Swiss francs. Sterling was up at $1.9286. The dollar hit its lowest level so far this year against sterling.
Much of the dollar’s weakness in recent years has been attributed to concerns about the sustainability of a high deficit and concerns over whether the economy can attract enough capital flows to fund it. But despite the dollar’s sharp slide lower, many observers said it was overdone.
On March 9, the dollar weakened broadly with selling pressure unabated following a technically driven sell-off in the previous session. Constant talk of central bank reserve diversification, Middle East tensions and instability were just more reasons to sell cited by investors wary of holding dollars.
In New York, the euro was up at $1.3385, having hit a two-month high of $1.3423 earlier in the day. The dollar was off at 1.1591 Swiss francs, and weaker against the yen at 103.94 yen. Sterling bucked the trend, trading down at $1.9236.
A surge in oil prices during the day also didn’t help the dollar.
On March 10, the dollar fell against most currencies on speculation the US trade deficit is widening and concerns some central banks are reducing their dollar holdings, but the currency ended off the day’s lows. This week’s dive in the US Treasury bond prices also weighed on the dollar.
In New York, the euro was up 0.2 percent at $1.3417. The dollar was down 0.4 per cent at 1.1539 Swiss francs. The dollar was slightly higher against the yen at 104.08 yen. The euro rose to 140.00 yen earlier in the session for the first time this year.
Renewed dollar selling helped sterling climb above $1.93 in early trade - within a quarter-cent of this year’s high - but it pared gains after the rate verdict to stand little changed at $1.9240.
