February 20, 2006	Monday	Muharram 21, 1427

THE rupee-dollar parity rates fluctuated in a tight-range due to a persistent demand for the US currency in the local currency market last week. In the open market, it reached Rs60 a dollar in the early session on the last day of the week, but than recovered marginally later in the day.

On the opening day of the week, the rupee extended its weekend fall in the inter-bank market due to an increasing demand for dollar by the importers to meet their payment requirements. The rise in dollar demand pushed the rupee down one paisa for buying and two paisa for selling at Rs59.88 and Rs59.90 on February 13, against the previous week close of Rs59.87 and Rs59.88

Though, the demand for dollar persisted, the rupee showed firmness on February 14, changing hands at Rs59.88 and Rs59.89, amid some dollar selling by the exporters. The rupee was stable for buying, while it managed to recover one paisa for the selling.

On February 15, the parity in the inter-bank market remained unchanged, as the rupee continued to trade at its overnight levels of Rs59.88 and Rs59.89 versus the dollar. On February 16, the rupee gained one paisa for buying, while it held the overnight level for selling to trade at Rs59.87 and Rs59.89.

On February 17, both the foreign and local banks were engaged in hectic dollar in anticipation of more increase in the value of the greenback in the near future. The dollar posted fresh gains amid rising demand by the importers to cover the oil. The dollar picked up five paisa for buying and six paisa for selling changing hands at Rs59.92 at Rs59.94.

In the open market, the rupee, on the opening day of the week, came under downward pressure versus the dollar on higher demand in the inter-bank market, which bought the dollar in the open market to cover its clients demand. The rupee lost seven paisa for buying and 12 paisa for selling to trade at Rs59.87 and Rs59.97 on February 13. Last week it closed at Rs59.80 and Rs59.85

The rupee, however, fluctuated in a narrow band against the dollar, which traded at Rs59.88 and Rs59.95 on February 14. On February 15, the rupee shed two paisa for buying but remained unchanged for selling changing hands at Rs59.90 and 5995. On February 16, the rupee managed to recover five paisa for buying, but remained unchanged for selling for the third successive day trading at Rs59.85 and Rs59.95, amid disturbances in the city.

On February 17, the rupee shed five paisa versus the dollar for buying while it did not show any change for selling and traded at Rs59.90 and Rs59.95. The rising demand for dollar kept the rupee under pressure. During the week, the rupee shed 10 paisa against the dollar in the open market.

Versus the European single common currency, the rupee moved down slightly on February 13 and traded at Rs71.10 and Rs71.20 against last week’s Rs71.09 and Rs71.19. On February 14, the rupee remained unchanged and traded at its overnight levels of Rs71.10 and Rs71.20. On February 15, the rupee/euro parity shed five paisa, with the rupee trading at Rs71.15 and Rs71.25 versus the euro.

On February 16, the rupee gained 20 paisa versus the euro and traded at Rs70.95 and Rs71.05. The rupee managed to gain five paisa more against the euro to trade at Rs70.90 and Rs71.00 on February 17. The rupee, however, managed to gain 19 paisa versus the European single currency this week.

On the international front, the dollar stabilised on February 13, with investors awaiting Federal Reserve Chairman Ben Bernanke’s congressional testimony later in the week to gauge the course of the US interest rates. Dollar sentiment has been bolstered in recent weeks by the increasing likelihood that the Fed will continue to raise interest rates to five per cent by mid year from their current level of 4.50 per cent.

The dollar briefly extended these gains to new 6-week highs against the euro, sterling and Swiss francs. The euro was relatively flat against the dollar at $1.1908, after earlier sliding to $1.1880 – it’s lowest since January 3. Against the yen, the dollar slipped 0.2 per cent to 117.71 yen, well off a seven-week high of 119.40 yen posted earlier this month.

Sterling also fell to a six-week low at $1.7365 before trading back up to $1.7420, nearly flat from levels late week. The pound’s fall accelerated after earlier rumours of a bus explosion in London, although the currency came back quickly as police later confirmed it was a traffic accident. Against the Swiss franc, the dollar traded little changed at 1.3065 francs, after rising to a six-week high at 1.3105 francs.

On February 14, the dollar pared gains against European currencies after a rally on strong US economic data fizzled, with traders squaring up ahead of testimony. The yen gained broadly for the third consecutive session, supported by a steady unwinding of bets against the Japanese currency due to a growing view that the Bank of Japan could end its ultra-loose monetary policy in the next few months.

The euro was at $1.1915, up 0.1 per cent from the preceding day, after falling as low as $1.1860 in the aftermath of a report showing the US retail sales excluding automobiles rose at the quickest pace in six years. The dollar was down 0.2 per cent at 117.40 yen. The dollar edged up 0.1 per cent against the Swiss franc to 1.3080 francs, off intra-day peaks at 1.3138 francs.

On February 15, the dollar rose with views on the US interest rates and economic growth intact after Federal Reserve Chairman Ben Bernanke delivered few surprises in congressional testimony and oil prices declined. The dollar erased early losses sustained after the US net capital inflows for December came in much lower than expected.

The euro was down 0.25 per cent against the dollar from the previous day’s $1.1885. The dollar rose 0.3 per cent against the yen to 117.85 yen. Against the Swiss franc, the dollar was up 0.2 per cent at 1.3106 francs. Sterling maintained broad gains after a quarterly report by the Bank of England said inflation will probably stick to target over the next two years. The pound rose 0.3 per cent to $1.7408.

On February 16, the dollar drifted lower with mixed US economic data outweighing Federal Reserve Chairman’s latest interest-rate supportive remarks. In a second day of congressional testimony, he reiterated his upbeat assessment of the US economy and an earlier warning about inflation risks, leaving expectations for further Fed rate hikes little changed.

The Philadelphia Federal Reserve Bank’s survey of business conditions provided only light support for the dollar despite a strong reading. Its business activity index jumped to 15.4 in February from a weak 3.3 reading the previous month. This was the indicator’s highest reading since August 2005.

In late trading in New York, the euro was slightly higher against the dollar at $1.1892 with traders locking in. The dollar crept 0.1 per cent lower to 117.65 yen. The dollar was little changed at 1.3108 Swiss francs while sterling was at $1.7385.

The sterling dropped towards a recent six-week low against the dollar and extended losses against the euro on Thursday after weaker than expected UK retail sales prompted talk of a near-term interest rate cut. It was down 0.36 percent on the day versus the dollar at $1.7342, having earlier hit a low of $1.7309 - not far off six-week nadir of $1.7276 of February 14.

At the close of the week on February 17, the dollar rose against the yen and pushed near a six-week high versus the euro as traders shed the Japanese currency after it failed to gain on data showing robust Japanese economic growth in the latest quarter.

The dollar was up about 0.4 per cent at 118.15 yen after rebounding from a low near 117.30 yen struck soon after the GDP figures landed. Japanese importers were likely dollar buyers at the lows, traders said. The euro edged down to $1.1885 from around $1.1900, holding above a six-week low of $1.1849 hit in the previous session.

Sterling eased against the dollar after a volatile week, as investors absorbed data that re-opened debate on the likelihood of a near-term interest rate cut. It was 0.11 percent lower against the dollar at $1.7370, having hit a six-week low earlier this week at $1.7276. The dollar stood at 1.3133/36 francs, up from levels of 1.3118/23 francs seen in Europe late on February 16.