April 09, 2007	Monday	Rabi-ul-Awwal 20, 1428

THE rupee-dollar parity rates moved both ways in the currency market this week in quiet trading. Though the demand for dollar existed, which kept slight pressure on the rupee but sufficient dollar supply restricted any major decline in rupee value versus the US currency in the local currency market during the week. The rupee, however, responded to sharp fluctuations versus the European single common currency.

In the interbank market, the week commenced on a positive note with the rupee gaining two paisa on buying counter and another three paisa on selling counter on April 2. The dollar was seen changing hands at Rs60.68 at Rs60.70 during the day. The rupee had closed last week at Rs60.71 and Rs60.73 against the US dollar.

On April 3, rising demand for dollar by the corporate sector, pushed the rupee lower against the greenback. As a result, the rupee failed to hold its overnight firmness and lost two paisa for buying and one paisa for selling to trade at Rs60.70 and Rs60.71 against the dollar.

The rupee extended its downtrend versus dollar on April 4, shedding four paisa on rising demand for dollar, which traded at Rs60.74 and Rs.60.75. Reportedly, local and foreign banks purchased approximately $50 million to meet the payment requirements during the day.

On April 5, the rupee showed a stable trend versus the dollar as it managed to maintain its overnight levels, trading unchanged at Rs60.74 and Rs60.75. On April 6, the rupee extended its firmness against the dollar for the third day in a row and traded unchanged at Rs60.74 and Rs60.75. During the entire week, the rupee in the inter bank market shed three paisa against the dollar on buying counter and two paisa on selling counter.

On the opening day of the week in review, the rupee maintained its weekend levels against the dollar and traded unchanged at Rs60.60 and Rs60.70 in the open market. Last weekend, the rupee had picked up 15 paisa in relation to the dollar to trade at Rs60.60 and Rs60.70. The rupee did not show any change versus the dollar on the second day of the week in review and maintained its weekend levels against the dollar for the third day in a row at Rs60.60 and Rs60.70 on April 3.

The rupee continued unchanged at Rs60.60 and Rs60.70 for the third successive day of the week in review on April 4. On April 5, however, the rupee gave up its firmness and shed five paisa to trade at Rs60.65 and Rs60.75 against the dollar on the fourth day of trading, as strong demand by the banks exerted downward pressure on the rupee.

Persisting demand for dollar in the open market continued to exert downward pressure on the rupee on the fifth day of the week in review. The rupee further extended its overnight weakness versus dollar, losing seven paisa and traded at Rs60.72 and Rs60.82 on April 6. This week, the rupee suffered a cumulative fall of 12 paisa against the dollar in the open market.

Versus the European single common currency, the rupee lost 20 paisa on the first day of trading, changing hands at Rs80.81 and Rs80.90 on April 2. Earlier last week, the rupee had lost 35 paisa against the euro, which closed the week at Rs.80.60 and Rs60.70 last weekend. However, on the second trading day, the rupee managed to gain 10 paisa against the euro and traded at Rs80.70 and Rs80.90 on April 3.

On the third trading day, the rupee extended its overnight firmness and picked up 11 paisa against the euro, trading at Rs80.59 and Rs80.69 on April 4. But on the fourth day of the week in review, the rupee failed to hold its overnight firmness and shed 13 paisa against the euro, which traded at Rs80.72 and Rs80.82 on April 5.

The rupee continued its slide against the euro on April 6. It shed 35 paisa and traded at Rs81.07 and Rs81.17 on the fifth trading day. During the week in review, the rupee lost 47 paisa against the European single common currency.

In the international financial market, the dollar held steady against the euro and the yen on the opening day of the week, after a report showed growth in the US manufacturing sector slowed in March but prices paid rose more than expected.

In New York, the euro was up 0.1 percent at $1.3370. The euro rose to a near two-year high just above $1.34 last week.

The US dollar fell 0.1 per cent to 117.70 yen while the euro crept up 0.1 per cent to 157.50 yen. Sterling rose to a nine-week high against the dollar as the view grew that the Bank of England could raise interest rates this week. It was up 0.6 per cent on the day against the dollar at $1.9785, having hit a high of $1.9802 - last seen in late January.

On April 3, the yen dropped to a one-month low versus the dollar on expectations that Japanese investors will resume selling the currency as they park money overseas in the fiscal year just started. Traders said that with the new fiscal year under way, speculation was growing that the yen come under renewed pressure as Japanese investors resume purchases of higher-yielding overseas assets.

The dollar rose against the Swiss franc and the euro, which stumbled as some traders cut back long positions following the currency's failure to sustain a brief rise above $1.34 earlier in the week. In New York, the dollar was up one per cent at 118.95 yen while it had risen 0.6 percent to 1.2225 Swiss francs.

The euro was up 0.7 per cent at 158.55 yen, after touching 158.85, its highest in five weeks. The yen also hit a 10-year low against the Australian dollar. The euro fell 0.3 per cent to $1.3330 but stayed in sight of a two-year high of $1.3412 hit in March. Sterling hit a 2-1/2 month high versus the dollar for a second session, at $1.9822, before retreating to stand at $1.9775.

On April 4, the dollar fell after data showing growth in the US service sector slid to a four-year low in March, reinforcing a view that the US economy is weakening. The dollar neared a two-year low against the euro. The dollar had earlier trimmed some losses after Iran said it intends to release 15 British sailors and Marines held captive for more than a week, but those gains were quickly erased after the ISM data.

The euro was up 0.3 per cent at $1.3370, still within sight of a two-year peak above $1.34 struck in March. The dollar fell against the yen, trading down 0.2 percent at 118.70 yen. Sterling was barely changed on the day at $1.9757, short of peak of $1.9823 hit in the previous session, the highest in more than two months. The pound was broadly steady on the day at $1.9737, having hit a peak of $1.9822 on April 3 - last seen in late January.

On April 5, the dollar slid to a two-year low against the euro as trade wound down ahead of a closely watched US jobs report at the end of the week that may shed more light on the outlook for US interest rates. Dealers said, however, that trade had almost ground to a halt due ahead of weekend Easter holidays, and that the euro's rise was largely technical in nature.

The euro rose as high as $1.3442 after triggering automatic buy orders above $1.3410, said one trader, its highest since March 2005. The euro last changed hands at $1.3425, up 0.4 per cent, and was now around two and a half cents short of a record high struck in December of 2004. The dollar stood at 118.66 yen, little changed on the day and down from a five-week high of 119.09 yen touched on April 4.

The Canadian dollar was the day's biggest mover, with the US dollar falling 0.75 per cent against its Canadian counterpart to C$1.1502 after data showing Canada's economy added 54,900 jobs in March, well above consensus. Sterling fell 0.2 percent to $1.9715 after the Bank of England left rates on hold at 5.25 per cent, disappointing some who had bet on a rate hike. Most analysts still expect the central bank to raise rates in May.

At the close of the week on April 6, the dollar hung near a two-year low against the euro, as investors braced for US employment figures due later in the session that could put more selling pressure on the US currency, according to a Reuters survey. The euro traded at $1.3418 as down slightly from around $1.3430 in late US trading after reaching its highest level since March 2005 at $1.3442 on April 5.

The dollar inched higher to 118.87 yen from around 118.75 yen in late New York trade, not far from a five-week high of 119.09 yen touched earlier in the week. The yen has been on the defensive this week amid signs of overseas investment by Japanese institutional investors at the start of a new fiscal year.