THE rupee gave up its recent gains against the dollar as the political crisis continued unabated in Islamabad. The fall in the local currency’s value was only checked after the central bank intervened in the currency market last week.

Renewed dollar demand from panicked buyers, amid some speculative trading, weighed down on the rupee’s value. On the interbank market, the rupee commenced the week with a big fall of 150 paisas for buying and 155 paisas for selling, as the greenback ended the first trading session at Rs103.15 and Rs103.25, against the prior week’s close of Rs101.65 and Rs101.70.

Chart by Rehan Ahmed

On Tuesday, following a major central bank intervention, the local currency recovered 75 paisas for buying and 80 paisas for selling, pushing dollar lower to Rs102.40 and Rs102.45.

The rupee then picked up another 20 paisas for buying and 15 paisas for selling in the third trading session, as the dollar ended the day at Rs102.20 and Rs102.30. However, the rupee shed 15 paisas for buying and 10 paisas for selling, as the greenback ended the fourth trading session at Rs102.35 and Rs102.40.

The rupee fell 10 paisas against the dollar in interbank dealings and by 30 paisas in the open market last week

In the last trading session, the rupee posted a gain of 60 paisas, as the dollar slipped to Rs101.75 and Rs101.80 at the close of the week. On a net basis, the dollar rose by 10 paisas against the rupee in interbank dealings last week. The rupee depreciated by 2.8pc against the greenback in August.

In the open market, the rupee started the week with a big loss of 90 paisas, as the dollar ended the first trading session at Rs102.20 and at Rs102.40, against the prior week’s close of Rs101.30 and Rs101.50.

After the SBP’s intervention, the rupee regained 90 paisas to end the second trading session back at Rs101.30 and Rs101.50. However, it posted a loss of 40 paisas in the third trading session, as the greenback ended the day at Rs101.70 and Rs101.90. The rupee-dollar parity remained unchanged at this level in the fourth trading session.

The local currency ended the week with a gain of 10 paisas, as the dollar slipped to Rs101.60 and Rs101.80. The rupee shed a net 30 paisas against the dollar last week, and depreciated by 3pc in August.

However, the rupee performed slightly better against the euro last week, amid some fluctuation. It started the week with a loss of 50 paisas, as the euro ended the first trading session at Rs134.00 and Rs134.25, against the prior week’s close of Rs133.50 and Rs133.75.

But the rupee regained 50 paisas in the second trading session to end the day at Rs133.50 and Rs133.75. The rupee-euro parity remained unchanged at this level in the third trading session.

The rupee then dipped by 25 paisas, as the euro ended the fourth trading session at Rs133.75 and Rs134.00. However, the local currency picked up 75 paisas in the last trading session, as the euro closed the week at Rs133.00 and Rs133.25. The rupee gained a net 50 paias against the euro last week. But the rupee was still down 100 paisas against the single currency in August.

Published in Dawn, Economic & Business, September 1st, 2014