THE rupee dropped against the dollar in the local currency market last week amid reports of forex outflows caused by the central bank making some external debt servicing payments.

Meanwhile, the rupee reportedly rose to six-year highs against the euro after the European Central Bank decided to buy eurozone government bonds on a big scale.

Liquid forex reserves reportedly declined by $194m in the first three weeks of the month, and total reserves were quoted at $15.02bn last week.

On the interbank market, the rupee started the week by losing four paisas for buying and five paisas for selling, sending the greenback slightly up at Rs100.79 and Rs100.81, against the prior week’s closing level of Rs100.75 and Rs100.76.

But it regained four paisas for buying and three paisas for selling in the second trading session, as the dollar dipped to Rs100.75 and Rs100.78. In the third trading session, the rupee inched down by one-paisa for buying but remained unchanged for selling, as the dollar ended the day at Rs100.76 and Rs100.78.

The local currency picked up three paisas in the fourth trading session, sending the dollar down to Rs100.73 and Rs100.75. However, it shed 27 paisas for buying and 30 paisas for selling in the fifth trading session, as the greenback closed the week at Rs101.00 and Rs101.05.

The rupee depreciated by around 29 paisas against the dollar in interbank dealings and by 50 paisas in the open market last week

During the week, the dollar appreciated by 25 paisas for buying and 29 paisas for selling in the interbank market.

In the open market, the rupee commenced the week by trading unchanged from the prior week’s close of Rs101.10 and Rs101.30. It then shed 10 paisas in the second trading session, as the dollar rose to Rs101.20 and Rs101.40. The rupee-dollar parity remained unchanged at this level in the third trading session.

The local currency then dropped 15 paisas in the fourth trading session, sending the dollar up at Rs101.35 and Rs101.55. In the last trading session, the rupee lost another 25 paisas, enabling the greenback to close the week at Rs101.60 and Rs101.80. During the week, the dollar gained 50 paisas against the rupee in the open market.

Meanwhile, the rupee had embarked upon a rollercoaster ride against the euro. It started the week with a loss of 25 paisas, which sent the single currency to Rs117.00 and Rs117.25 in the first trading session, against the prior week’s close of Rs116.75 and Rs117.00. The rupee-euro parity remained unchanged at this level in the next two consecutive trading sessions. In the fourth trading session, the rupee shed 100 paisas, sending the euro to Rs118.00 and Rs118.25.

However, the euro lost an unprecedented 400 paisas in the last trading session, as reports reached the market that the European Central Bank will embark upon a big bond-buying spree. As a result, the euro closed the week at Rs114.00 and Rs114.25, down 275 paisas on a weekly basis.

Published in Dawn, Economic & Business, January 26th , 2015

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