LACKLUSTRE trading activity was witnessed in the local currency market owing to expected external inflows approved by the IMF last week. Inflows in the market offset the repayment pressure against the 10-year Eurobond.

The rupee/dollar parity showed minor changes in the absence of buyers’ interest. Sustained selling of the greenback by banks and exporters, and low demand from importers backed up the rupee on the inter-bank foreign exchange market.

On the interbank market, the rupee inched up by one paisa on the buying but did not depict any change on the selling counter and traded at Rs104.73 and Rs104.75 in the first trading session.

Euro manages gains against the local currency

In the third trading session, however, the rupee slipped by one paisa against the dollar, retrieving prior weekend levels at Rs104.74 and Rs104.75. In the fourth trading session, the rupee retained its overnight rate unchanged on the buying counter but lost one paisa on the selling counter. The dollar was seen changing hands against the rupee at Rs104.74 and Rs104.76.

The local currency managed to post two paisas gain in the last trading session at Rs104.72 and Rs104.74. Despite the pressure on the rupee, the dollar in the interbank market lost two paisas on the buying counter and one paisa on the selling counter on a week-over-week basis after ending the January-March quarter almost flat.

In the open market, the week commenced on a negative note with the rupee moving in minus after snapping the three-day stability against the dollar. The rupee lost five paisas loss in the first trading session, changing hands against the dollar at Rs105.45 and Rs105.65, down from the prior weekend levels of Rs105.40 and Rs105.60.

The rupee did not show any change in the last trading session and closed the week flat at Rs105.40 and Rs105.60 against the dollar. On a week-on-week basis, the rupee in the open market traded flat against the dollar, escalating in close range. In March, however, the rupee appreciated by 0.85pc against the dollar and ended the first quarter with 50 paisas gain. However, the dollar has appreciated against the rupee by 1.8pc over the past 12 months.

Against euro, the rupee came under renewed pressure last week. The euro showed wide range variation, moving between the low of Rs117.25/Rs118.25 and high of Rs119.20/Rs120.20 in rupee terms.

The rupee assumed falling trend against euro in all the five trading sessions. In the first trading session, the euro surged to Rs117.40 and Rs118.40 from the previous weekend levels of Rs117.25 and Rs118.25 after the rupee turned negative, suffering 15 paisas loss.

During the week in review, the euro posted Rs2.25 gains against the rupee in the past five sessions. The rupee depreciated against the euro by 3.4pc in the month of March alone. The euro has appreciated against the rupee by 5pc over the past 12 months.

Published in Dawn, Business & Finance weekly, April 4th, 2016