IN the last full week of the year, the rupee slipped against the dollar in the local currency market. Trading also remained thin during the week, which was reduced to four sessions.

However, on a year-on-year basis, the rupee managed to appreciate around 4.5pc against the dollar in the open market. On December 23, 2013, the dollar was reportedly trading at Rs105.20 and Rs105.40; it had dropped to Rs100.70 and Rs100.90 by last Friday.

The rupee’s rollercoaster ride during 2014 saw it rise to 98 against the dollar, on the backs of big inflows from Saudi Arabia, donor agencies, privatisation proceeds and continuation of the Extended Fund Facility from the IMF. And according to Finance Minister Ishaq Dar, the country’s foreign exchange reserves reached the $15bn-mark this month.

The rupee has appreciated by around 4.5pc against the dollar and by 18pc against the euro so far in 2014

On the interbank market, the dollar commenced last week by rising to Rs100.55 and Rs100.60 over the prior week’s closing level of Rs100.54 and Rs100.56. The greenback then hovered in the range of Rs100.57 and Rs100.63 in the next two trading sessions.

With a surge in demand in the last trading session, the dollar rose 15 paisas for buying and 17 paisas for selling to close the week at Rs100.75 and Rs100.80. The dollar appreciated by 21 paisas for buying and 24 paisas for selling on the interbank market last week.

Chart by RA

In the open market, the rupee started the week with a marginal gain of five paisas, as the dollar ended the first trading session at Rs100.55 and Rs100.75, against the prior week’s close of Rs100.60 and Rs100.80. The greenback then traded in a range of Rs100.50/70 andRs100.45/50 in the next two trading sessions.

But due to sudden rise in demand for dollars, the rupee slipped by 25 paisas in the last trading session, as the dollar closed the week at Rs100.70 and Rs100.90. On a weekly basis, the rupee was down a net 10 paisas in the open market. However, the local currency has gained 1.8pc against the reserve currency so far in December.

Against the euro, the rupee traded within the Rs122/123 range last week.

On a net basis, the single currency lost 75 paisas against the rupee last week. The euro had shed 125 paisas in the first three trading sessions, and gained 50 paisas in one session.

So far in December, the rupee has appreciated by nearly 4pc against the single currency. Independent yearly analysis shows that the euro had hit a high of Rs145.60 and Rs145.85 against the rupee on January 29. And on a yearly basis, the rupee has appreciated by over 18pc against the euro.

The euro’s overall performance against the rupee this year resembles that of the dollar. However, analysts also partly attributed the euro’s fall to the debt and banking crisis in the eurozone, which has generally kept the single currency under pressure in world markets as well this year.

Published in Dawn, Economic & Business, December 29th, 2014