THE official rupee-dollar parity fluctuated slightly in the local currency market this week due to the lack of dollar-buying interest. However, downtrend was observed in the rupee-dollar value in the inter-bank market in the first three days of trading of the week in review.
The rupee in the inter-market traded at Rs59.63 and Rs59.64 on July 18, the opening day of the week in review, against Rs59.61 and Rs59.63 in the previous week, reflecting a loss of two paisa versus the dollar.
On July 19, the rupee fell further versus the dollar trading at Rs59.62 and Rs59.65, down two paisa over its overnight levels. It further extended it losses on July 20, moving down another two paisa versus the dollar to trade at Rs59.64 and Rs59.66 at close.
Dollars’ selling by the exporters and less buying interest by the importers on July 21, helped the rupee to improve from its previous levels. As a result, marginal recovery in the rupee-dollar parity was witnessed in the local currency market. In the inter-bank market, the rupee gained two paisa versus the dollar and traded at Rs59.62 and Rs59.64.
The rupee extended its gains over the dollar on July 22 on easy supply of the greenback, further recovering two paisa. The US currency in the inter-bank market was quoted at Rs59.60 and Rs59.63 on the day. Over the previous week close, the rupee/dollar in the inter bank market remained stable this week.
In the open market, the rupee maintained a firm outlook versus the dollar during the week in review. It traded at Rs60.45 and Rs60.50 on July 18, remaining unchanged over its last week close levels. Again the open market did not show any change on July 19, as the rupee remained stable at Rs60.45 and Rs60.50. It retained its overnight levels versus the dollar on July 20.
On July 21, the rupee-dollar parity continued unchanged at Rs60.45 and Rs60.50 for the fifth consecutive day. The rupee in the open market did not move any side versus the dollar closing the week unchanged at Rs60.45 and Rs60.50 on July 22.
The single European currency on July 18, recovered with modest gain versus the rupee, up 40 paisa for buying at Rs73.10 and 20 paisa on the selling counter to change hands at Rs73.20 against last week’s Rs72.70 and Rs73.00. On July 19, the rupee, however, managed to recover modest ground versus the euro on July 19, gaining 30 paisa at Rs72.70 and Rs72.90.
On the following day, the rupee failed to hold ground as the euro managed to gain 35 paisa in relation to the rupee, which was seen changing hands at Rs73.05 and Rs73.25 on July 20. The rupee further lost its value versus the euro, shedding 45 paisa on July 21, and traded at Rs73.50 and Rs73.70.
On July 22, the rupee displayed slight strength over the European single common currency. It showed an improvement of 20 paisa versus the euro for buying at Rs73.30 and also gained 10 paisa for selling to trade at Rs73.60 in cautious trading, after the two per cent of revaluation of the Chinese currency. Over the previous week close, the rupee lost 60 paisa versus the euro this week.
In the world markets, the dollar mainly held its firmness versus the leading currencies on expectations that the Federal Reserves will raise the interest rates in the coming days. On July 18, the dollar slipped across the board, as a capital inflows report showed selling of the US stocks by foreigners in May, suggesting uneven interest in dollar-denominated assets.
In late New York trading, the euro was up 0.2 per cent against the dollar at $1.2056, but off earlier session highs of $1.2089 as some investors covered early bets that the inflows data would be much worse than reported.
The dollar did manage to trade off the day’s lows as some investors covered short positions, betting the greenback would fall, when currency pairs failed to break through key levels after the TIC report. Japanese markets were closed on July 18 for a holiday. Sterling fell 0.2 per cent at $1.7481 after weak house price data from British property Web site Right move strengthened expectations of a Bank of England rate cut in August.
On July 19, the dollar hovered near 14-month highs against the yen and the Swiss franc late, amid expectations that the Federal Reserve Chairman Alan Greenspan will give an optimistic assessment of the US economy on the following day. In late New York trading, the dollar traded at 112.70 yen, after earlier climbing to 112.98 yen, highest since May 2004.
The dollar also climbed against the Swiss franc changing hands early in the session at 1.3081 francs before last trading at 1.2993, up 0.4 per cent on the day. Sterling fell 0.5 percent to $1.7397. The euro was down 0.2 per cent at $1.2034 helped somewhat by the ZEW indicator of German investor confidence. It fell as low as $1.1954 intraday and is down more than 11 per cent for the year.
On July 20, the dollar surrendered early gains after testimony from Federal Reserve Chairman Alan Greenspan failed to sustain its advance through key levels, prompting some investors to take back their bets. The euro traded up 0.9 per cent at $1.2139. The dollar eked out a 0.1 percent gain against the yen at 112.81 yen. Earlier the dollar rose to fresh 14-month highs against the yen, strengthening to 113.72 yen.
Sterling had been under pressure prior to Greenspan’s testimony after the release of minutes from the latest meeting of the Bank of England’s Monetary Policy Committee which showed a growing number of policymakers voting for a cut in the UK interest rates. The pound recovered later in the day against the dollar. It last traded at $1.7406 recovering from losses which saw it falling to $1.7273, a fresh 19-month low.
On July 21, the dollar plummeted against the yen in heavy trading after China abandoned its dollar peg in favour of a basket of currencies to manage the yuan. The yen’s rise accelerated and other Asian currencies firmed after Malaysia said it has changed the ringgit peg to a managed float, fuelling further gains in the Japanese currency.
In late afternoon trade, the dollar was down 2.2 per cent against the yen to 110.34 yen, after falling as low as 109.89.
Before China’s announcement, it was trading at around 112.40 yen. It was the biggest one-day percentage decline for the pair since March 2002.
The euro zone currency did manage gains against the dollar, on the greenback’s overall weakness, climbing 0.2 per cent to $1.2170, the euro rose to the day’s high of $1.2255 on the China news from around $1.2140 previously. The dollar fell 0.1 per cent against the Swiss franc, trading at 1.2845 francs. The euro fell 2 per cent against the yen to 134.28 yen, from around 136.60 before China’s announcement.
Sterling, meanwhile, was up 0.8 per cent at $1.7521, with investors almost ignoring news British transport officials closed London Underground lines after a series of explosions were reported. The pound earlier rose as high as $1.7615 on the China news.
At the close of the week on July 22, The yen fell sharply on Friday, giving back almost half of its hefty gains scored a day earlier when China ditched the yuan’s peg to the dollar, as the initial excitement over the long-awaited currency revaluation subsided, a day after the yen posted its biggest one-day jump against the dollar in more than three years.
The yen retreated as Japanese importers and investors took advantage of the two-yen tumble to pick up dollars on the cheap. The dollar was up around 0.6 percent on the day at 110.95 yen. The US currency had plunged more than two yen to as low as 109.87 yen in the aftermath of Beijing’s sudden move.
The dollar had struck a 14-month high just above 113.70 yen earlier in the week, helped by the prospect of further rise in the US interest rates. The euro was down 0.1 per cent against the dollar at $1.2148. Sterling fell over half a per cent against the dollar from the US close to trade as low as $1.7413.
THE official rupee-dollar parity fluctuated slightly in the local currency market this week due to the lack of dollar-buying interest. However, downtrend was observed in the rupee-dollar value in the inter-bank market in the first three days of trading of the week in review.
