A mounting demand for the US dollar in local currency market last week exerted pressure on the rupee. On September 12, the demand for dollar was high but the smooth supply of dollars restricted a sharp decline in the rupee value. The rupee shed two paisa versus the dollar to trade at Rs59.74 and Rs59.75 in the inter-bank market. Last week the parity was at Rs59.72 and Rs59.74.
On September 13, higher inflows of dollars helped the rupee to limit its losses versus the greenback which traded at Rs59.75 and Rs59.77. The rupee, however, lost three paisa against the dollar over the previous day’s close. The dollar buying pressure persisted in the inter-bank market on September 14. The rupee continued its downtrend against the dollar and lost four paisa more to close the day at Rs59.79 and Rs59.80.
A declining trend persisted in the inter-bank market on September 15, as the rupee continued its fall due to higher dollar-demand for payments. The rupee lost six paisa against the dollar for buying at 59.85 and seven paisa for selling at 59.87, thus the rupee shed its value approximately 12 paisa since the week started
On September 16, the rupee witnessed sharp decline in its value in relation to dollar, as importers were in the market buying dollars to meet the payment requirements. Since the oil prices hike in the world markets, the rising import bill has pushed the dollar buying up. Consequently, increasing demand for dollars has exerted downward pressure on the rupee.
In the inter-bank market the dollar was trading at Rs59.95 in the early session. However, towards the close of the day, the rupee managed to trim its losses changing hands at Rs59.85 and Rs59.87 following improved dollar supply. The falling trend in the local currency is being attributed to the widening trade deficit and shrinking remittances. During the week, however, the rupee lost 13 paisa versus the dollar over last week close.
In the open market, the rupee moved both ways on September 12, amid tight supply of dollar. But the rupee remained stable at its weekend level of Rs60.05 for buying, while gaining five paisa for selling to trade at Rs60.10 against previous weekend’s Rs60.05 and Rs60.15.
On September 13, the rupee recovered five paisa for buying while it maintained its firmness for selling, changing hands at Rs60 and Rs60.10. The rupee/dollar parity remained unchanged at its overnight levels on September 14. On September 15, the rupee/dollar parity traded in the narrow band at 60 and 60.05.
On September 16, the rupee moved both ways versus the dollar in the open market. It maintained its buying level at Rs60.00 but shed five paisa for selling trading at Rs60.10. Over the previous week close, the rupee in the open market was almost stable versus the dollar, amid fluctuations, this week.
The week open on a positive note with the rupee assuming upward trend versus the European single common currency. It gained 50 paisa for buying and 60 paisa for selling to trade at Rs73.60 and Rs73.70, amid low business, on the opening day of the week. The rupee last weekend had closed at Rs74.10 and Rs74.30 against the euro.
Amid falling demand for the single European currency on the second day of the week, the rupee extended its gains versus the euro and recovered 10 paisa more, trading at Rs73.50 and Rs73.60. On the third day of the week in review, the rupee further gained 10 paisa changing hands at Rs73.40 and Rs73.50 on September 14.
On the fourth day of the week in review, the rupee posted fresh gain of 40 paisa versus the euro for buying at Rs73 and 30 paisa for selling at Rs73.20. Towards the end of the week, the rupee failed to maintain its firmness versus the euro, dropping 45 paisa to trade at Rs73.45 and Rs73.65 on September 16.
During the week in review the rupee managed to recover 65 paisa versus the European common currency.
In the world markets, the dollar strengthened broadly on September 12, as investors reconsidered the impact of Hurricane Katrina on the US economy and decided the Federal Reserve will likely go ahead and push interest rates higher this month. In the New York session, the euro was down by more than one per cent at $1.2272, and sterling was down by a similar measure at $1.8232.
The dollar was up by 1.25 per cent against the Swiss franc at 1.2596 francs. It also gained a half per cent to 110.29 yen. The yen also received a boost in Asian trading from revised data showing Japanese economy grew 0.8 per cent in the
April-June quarter, faster than preliminary figures had suggested.
On September 13, the dollar edged up boosted by a smaller-than-expected US trade deficit in July, but investors sought more clarity as to whether the Federal Reserve would continue to raise interest rates. Currency traders shrugged off softer-than-expected growth in producer prices in August and focused on the trade numbers.
The August trade data showed the gap between the US imports and exports narrowed to $57.9 billion in July from $59.5 billion in June. The trade deficit also beat the $59.8 billion forecast by economists. But the inflation data helped to pare back expectations in interest rate futures of how aggressively the Federal Reserve will raise rates, pushing bond yields lower and putting a lid on the dollar.
The euro was at $1.2263, down 0.14 per cent compared with the previous day. It has remained within a range of $1.2590 to $1.1866 since May. Against the yen, the dollar was up 0.2 per cent, at 110.63 yen while against the Swiss franc, the green-back strengthened 0.2 per cent to 1.2615 francs. Against the dollar, the pound was also up a quarter of a per cent at $1.8233.
On September 14, the dollar crept lower as dealers took profits on its recent climb to two-week highs, but the currency was delicately balanced by technical factors that could swing the greenback in either direction.
The euro was up 0.1 per cent on the day at $1.2282, while sterling was also up 0.1 per cent, at $1.8241.The dollar was down 0.3 per cent at 1.2579 Swiss francs and had pared some losses against the yen to trade at 110.33 yen, down 0.3 per cent.
On September 15, the US currency pared some early gains after a much weaker-than-expected survey of mid-Atlantic factory activity, but dealers were hesitant to take the dollar lower given the prices paid category of the poll more than doubled and another regional survey was largely in line with expectations.
The euro see-sawed throughout the session, dipping briefly to a two-week low below $1.22 before settling around $1.2225, down about 0.5 per cent from levels in New York. Against the Swiss franc, the dollar traded up 0.8 per cent at 1.2673 francs. The yen, the dollar traded at 110.68 yen, up 0.3 per cent, near session highs. Sterling hit a two-week low of $1.8046. It fell one percent on the day against the.
At the close of the week on September 16, the dollar fell against the euro but it stayed glued to ranges on expectations the Federal Reserve will raise the US interest rates next week.
The euro jumped as market players closed short positions after pushing the single currency to a two-week low versus the dollar a day earlier.
The euro climbed as high as $1.2310 but eased to $1.2290 after stops placed at $1.23 were taken out. It was still up 0.5 percent on the day but remained in the $1.22-$1.25 range it has treaded the past two weeks. The dollar was little changed on the day at 110.60 yen. Sterling was down slightly against the dollar at two-week lows of $1.8031 after weak data in the previous session rekindled speculation of a UK rate cut.
A mounting demand for the US dollar in local currency market last week exerted pressure on the rupee. On September 12, the demand for dollar was high but the smooth supply of dollars restricted a sharp decline in the rupee value. The rupee shed two paisa versus the dollar to trade at Rs59.74 and Rs59.75 in the inter-bank market. Last week the parity was at Rs59.72 and Rs59.74.
